That economic barometer of America Wal-Mart just
finished a tough quarter.
The Arkansas retailer, which employs about 6,000 workers in Greater Memphis, reported Thursday that its first-quarter profit edged up only slightly after frugal consumers held back.
"This is a reality check for Wal-Mart's low-income shoppers," said Brian Sozzi, chief equities strategist at Belus Capital Advisers. "The low-income shopper is even more financially stressed than people realize."
Executives at the world's largest retailer blamed a payroll tax increase, delayed tax refunds and bad weather.
A big hurdle for Wal-Mart Stores Inc.'s customers has been tax changes. An increase in the payroll tax of two percentage points, which took effect Jan. 1, means that a take-home pay for a household earning $50,000 a year has been sliced by $1,000.
Wal-Mart said Thursday that it earned $3.78 billion, or $1.14 per share, in the quarter that ended April 30. That compares with $3.74 billion, or $1.09 per share, a year earlier.
Sales rose 1 percent to $113.43 billion. That figure excludes Sam's Club membership fees.
The results fell short of Wall Street expectations for earnings of $1.15 per share on revenue of $115.78 billion.
Wal-Mart reported a 1.4 percent drop in revenue at stores open at least a year at its namesake business, which accounts for about 60 percent of its business. That was the first drop in about a year and a half. At Sam's Club, the figure rose 0.2 percent, held down by less traffic from business customers, bad weather and lower-than- expected inflation.
For the total U.S. business, revenue at stores open at least a year fell 1.2 percent, below the 0.4 percent increase that analysts had expected.
Wall Street analysts had expected its U.S. namesake business to be unchanged and were projecting a 1.2 percent rise at Sam's Clubs.
Revenue at stores open at least a year is considered a key measurement for retailers because it excludes the effect of stores that open or close during the year.
Internationally, Wal-Mart is facing slower growth amid a global recession.
A bribery scandal also threatens to slow its business overseas. Allegations first surfaced a year ago that Wal-Mart failed to notify law enforcement that company officials authorized millions of dollars in bribes in Mexico to speed up getting building permits and gain other favors. Wal-Mart has been working with government officials in the U.S. and Mexico on that investigation. The company has been strengthening its compliance controls.
Wal-Mart has already slowed its expansion plans in Mexico, and last November it said it was looking into potential U.S. bribery law violations in Brazil, China and India.
Wal-Mart said it expects earnings per share to be in the range of $1.22 to $1.27 in the current quarter. Analysts had expected $1.29 per share.
Originally published by Anne D'Innocenzio Associated Press / The Commercial Appeal contributed to this report. .
(c) 2013 Commercial Appeal, The. Provided by ProQuest LLC. All rights Reserved.
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