Wal-Mart Stores Inc. (NYSE:WMT) and Kohl’s Corporation (NYSE:KSS) released their earnings reports for the third quarter of the year this morning before the market opened on Wall Street. Both reports disappointed Wall Street, but Kohl’s significantly missed expectations and its shares were in a tail spin in early trading.

Wal-Mart

The two earnings reports show weakness in the retail sector in the third quarter of the year, and point to weaker than expected economic confidence. Wal-Mart Stores Inc. (NYSE:WMT) is the largest retail company in the world, while Kohl’s Corporation (NYSE:KSS) is a U.S. based retailer with a much smaller market cap. Both companies lowered their guidance for the full year in the earnings reports they delivered this morning.

Wal-Mart Earnings

Wal-Mart Stores Inc. (NYSE:WMT) showed earnings per share of $1.14 for the quarter it recorded as the third of financial 2014. The company’s revenue came in at $115.69. Earnings at the retailer beat analyst expectations of $1.13, but failed to meet Wall Street’s earnings projections. Analysts were looking for sales of $116.84 billion from the third quarter.

On this morning’s market, shares in Wal-Mart Stores Inc. (NYSE:WMT) were down by a fraction. The company’ stock has struggled to grow through 2013, and has lagged major indices. Wal-Mart stock has gained just over 14% for the full year, well behind the S&P 500 gains of close to 25%. Shares in Wal-Mart are trading at more than 15 times 2012 earnings. That indicates investors are expecting the company to grow in the coming years, though it is lower than the S&P 500 average of more than 18.

In this morning’s release Wal-Mart Stores Inc. (NYSE:WMT) cut its full year guidance on earnings per share to $5.11 to $5.21. The projection previously stood at $5.10-$5.30 per share. Wal-Mart investors are still relatively optimistic about the company’s prospects despite the disappointing earning the company showed this morning, and the disappointing outlook for the full year.

Wal-Mart Stores Inc. (NYSE:WMT) results are disappointing and the results do show a weak consumer economy. The company’s troubles are nothing compared to those of Kohl’s Coronation (NYSE:KSS), however.

Kohl’s Corporation earnings

This morning Kohl’s Corporation (NYSE:KSS) showed earnings per share of 86 cents for the third quarter of the year. Revenue came in at $4.4 billion. Both figures missed the expectations of analysts. Wall Street was looking for consensus revenue of $4.6 billion and consensus earnings of 81 cents per share. The problems at Kohl’s did not end there, however.

The real shock in this morning’s report was the company’s guidance for the full year. The company said that it expects to earn $1.59 to $1.74 per share in the quarter through January 2014. The company said that it expects its sales to fall 2 to 4% year on year in the quarter it records as the fourth of 2013.

Kohl’s projections for the full year fell as a result of today’s earnings miss, and the company’s change in guidance. The company lowered its guidance earnings per share range from $4.15 – $4.35 to $4.08 to $4.23. Shares in the company were trading more than 8% below yesterday’s close as a result of this morning’s earnings release.

Kohl’s Corporation (NYSE:KSS) shares have grown in line with the S&P 500 through 2013, and the company’s investors are clearly still alright with the company’s prospects, despite this morning’s miss.

The most important questions arising from this morning’s earnings reports from Kohl’s Corporation (NYSE:KSS) and Wal-Mart Stores Inc. (NYSE:WMT) relate to the health of the consumer economy as the retail sector heads toward the all-important fourth quarter. The sector does not look strong as the Christmas season approaches, and analysts may have to readjust expectations.