Though earnings down, Wal-Mart sees more traffic
Wal-Mart reported improved customer traffic and an uptick in a key sales figure for the third quarter, even as a stronger dollar pressured its performance overseas.
The world’s largest retailer also issued a forecast for the holiday shopping season that largely topped Wall Street expectations, and narrowed its full-year outlook after cutting it in August.
Its shares rose more than 3 percent Tuesday to $59.92. Wal-Mart shares have decreased 33 percent since the beginning of the year.
Cleaner stores
Wal-Mart has been pressured on a number of fronts this year. The company, based in Bentonville, Ark., is facing increasing competition from online retailers like Amazon.com and dollar stores, and its profits have been squeezed by pay raises for workers and a strong U.S. dollar that has dampened sales from overseas.
In the U.S., the company is also trying cleanliness and service. Greg Foran, CEO of the U.S. division, said during a call with reporters Tuesday that customers are telling the company they’re seeing improvement in the stores.
The company said sales at stores open at least a year rose 1.5 percent, marking the fifth straight quarterly increase. But the increase was driven by higher traffic, while average spending per visit dipped. This figure is a key gauge of a retailer’s health because it excludes results from stores recently opened or closed.
For the fourth quarter, which includes the key holiday shopping season, Wal-Mart said it expects sales at established locations to rise 1 percent. Foran declined to say how much that would be driven by increased traffic, versus higher spending. But he expressed confidence in the company’s holiday plans.
Santa Claus
During the holiday season, the retailer is aiming to further bolster the customer experience, including by adding in-store Santas in many outposts, something it has not consistently done over the years.
For the quarter that ended Oct. 31, Wal-Mart’s net income fell 11 percent to $3.3 billion. But its earnings of $1.03 per share topped Wall Street expectations for 97 cents per share, according to Zacks Investment Research.
Revenue slipped to $117.42 billion from $119 billion.
Wal-Mart also narrowed its forecast for fullyear earnings to a range of $4.50 to $4.65 after cutting that outlook in August to $4.40 to $4.70 per share.