Wal-Mart Doesn’t Live Up To Expectations

    May 12, 2005
    Chris Crum

Wal-Mart has predicted that its earnings for this quarter will be lower than Wall Street analysts’ expectations. Consumer spending has decreased as a result of high fuel prices.

Wal-Mart’s first-quarter earnings took a hit for this same reason, and the company doubts that it will hit its full-year targets as well. Wal-Mart expects its second-quarter earnings to be between 63 cents to 67 cents per share. Analysts were expecting 70 cents a share.

President and CEO Lee Scott comments on the company’s first-quarter results, “We achieved record results in the quarter. Yet with higher gasoline prices and a cooler and wetter spring than normal, we missed our plan. We are making the necessary adjustments and I anticipate better results in the second half of the year.” MarketWatch sums up Wal-Mart’s first-quarter performance:

Excluding one-time items, Wal-Mart earned 55 cents a share in the latest quarter. Analysts polled by Thomson First Call were looking for earnings, on average, of 56 cents a share.

Sales reached $70.91 billion, up 9.5% from $64.76 billion. U.S. same-store sales — or sales generated at stores open at least a year — rose 2.9%. Total revenue climbed to $71.68 billion from $65.44 billion. Analysts forecast sales at $72.05 billion.

According to a press release, the SAM’S CLUB segment generated segment operating income for the quarter of $295 million, an increase of 10.5% compared with $267 million in the first quarter of fiscal 2005.

The International segment had segment operating income of $667 million for the most recent quarter, an increase of 18.5 percent compared with $563 million in the first quarter of fiscal 2005.

Wal-Mart shares closed down 12 cents yesterday at $48.60. With this negative outlook, I would expect them to drop further throughout the rest of today, but you never know.

Chris is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.