Wal-Mart Stores, Inc. (NYSE:WMT)’s sales for the first quarter increased by a minimal 0.8% and the retailer’s profit for the quarter fell 5% compared to the same period last year.
The world’s largest retailer also sounded a cautious note as it anticipates its second-quarter earnings per share will be below average analyst estimates.
Wal-Mart’s sixth consecutive decline in traffic
Traffic at U.S. stores dropped 1.4% in the latest period, the sixth consecutive quarterly decline. Meanwhile, sales at Wal-Mart Stores, Inc. (NYSE:WMT) locations in the U.S., excluding newly opened or closed stores, fell 0.1%, although the company said a solid start to spring and a strong Easter drove sales in the second half of the quarter.
For the current quarter, the retailer said it expects earnings of $1.15 to $1.25 a share, below analysts’ expectations of $1.28 and compared with $1.24 a year earlier.
The net income attributable to Wal-Mart Stores, Inc. (NYSE:WMT) fell to $3.59 billion, or $1.11 per share, in the first quarter ended April 30, from $3.78 billion, or $1.14 per share, a year earlier.
Siddharth Cavale of Reuters points out that the retail giant has also been struggling with a sharp cut in federal benefits under the Supplemental Nutrition Assistance Program, the largest U.S. anti-hunger program. At least one in five of Wal-Mart Stores, Inc. (NYSE:WMT)’s customers relies on food stamps.
Stung by weather
The largest retailer’s CEO Doug McMillon said in a statement: “Like other retailers in the United States, the unseasonably cold and disruptive weather negatively impacted U.S. sales and drove operating expenses higher than expected”.
While unveiling its results in February, the retailer said that the U.S. economy has failed to make the recovery it needs and also cited cuts in benefits like food stamps for its disappointing profits. The largest retailer also indicated that its profits would come in at the low end of analysts’ expectations for the year ending January 2015. The retailer stated that it expected profits per share to be $5.10 to $5.45. Bloomberg, in compiling analysts’ predictions, found the average of 28 estimates to be $5.55.
In another development today, workers at a Riverside County warehouse and distribution complex for Wal-Mart Stores, Inc. (NYSE:WMT) agreed to settle a long-running battle over wage issues by accepting $21 million in unpaid wages, interest and penalties.
Wal-Mart also said it’s not opposed to an increase in minimum wage.