“Wal-Mart Stores Inc. (WMT), the world’s largest retailer, forecast second-quarter profit that was less than analysts estimated as its shoppers struggle amid the slow U.S. economy and higher taxes.
Earnings per share will be $1.22 to $1.27, the Bentonville, Arkansas-based company said today in a statement. Analysts projected $1.29, the average of 24 estimates compiled by Bloomberg. Sales in the fiscal first quarter ended April 30 trailed analysts’ estimates while profit matched projections.
Chief Executive Officer Mike Duke has cut prices on groceries and other necessities as the chain’s lower-income shoppers deal with elevated unemployment and higher Social Security taxes. First-quarter sales at U.S. Wal-Mart stores open at least 12 months fell 1.4 percent, the first drop after six straight gains. Analysts estimated a 0.1 percent decline.
“They’re pressured by the economy, unemployment, the increase in payroll taxes, the delay in tax returns,” Bernard Sosnick, an analyst at Gilford Securities based in New York, said today in an interview. “All these negatives coalesced in the first quarter.”
Sosnick recommends buying the shares and said improvement in the economy and lower gas prices should help Wal-Mart later in the year.
The shares fell 2.9 percent to $77.53 at 7:54 a.m. in New York. Wal-Mart had gained 17 percent this year through yesterday, compared with a 16 percent gain for the Standard & Poor’s 500 Index.
