Wal-Mart Trims Q3 Expectations

Wal-Mart's income for the second quarter that ended July 31 totaled $3.11 billion, an increase of 4.1% from $2.9 billion in the second quarter of last fiscal year, and its per-share earnings rose to 76 cents from 72 cents in the same quarter the previous year. Net sales for the second quarter were nearly $92 billion, an increase of 8.8% on a year-to-year basis. It reported a US comparable store sales increase of 1.9%, which was composed of a 5.9% increase in Sam's Club stores and a 1.2% increase at Wal-Mart Stores. Nonetheless, Wal-Mart president and CEO Lee Scott said that the quarter's results were "not what we expect of ourselves."

"For the remainder of this year, our management team is focused on inventory improvements, delivering quality products at low prices and store execution at the highest standards," Scott said. He pointed out that consumers "continue to be under pressure economically," one of the factors affecting Wal-Mart's fortunes.

"The top concerns among our customers are economic," Scott said. He said specific concerns include the increase in the cost of living and gas prices, adding that, "Many customers are running out of money toward the end of the month."

With their concerns about the economy and other factors, Wal-Mart execs cut the company's forecast on full-year earnings to between $3.05 and $3.13 per share. The company's initial forecast for earnings per share was between $3.15 and $3.23. Tom Schoewe, Wal-Mart Stores Inc. EVP and CFO, said the change reflected " the economic trends that have developed in many of our major markets."

Scott cited economic pressures in other countries besides the US, pointing out for example that consumers in Canada and Mexico are also feeling the pinch of tighter times. "As the economy slowed down this past quarter in Mexico, Walmex implemented an aggressive cost-reduction program in every area of its operations, excluding customer service."