Wal-Mart sales under global pressure

Wal-Mart Stores Inc posted disappointing quarterly sales on Thursday as shoppers in key markets like the United States battled high gasoline prices and unemployment, while store traffic continued to decline in China.. Lower prices for some food and electronics reduced Wal-Mart's US sales, and growth at the company's Sam's Club unit also fell short of Wall Street expectations—rising at half the rate compared with a year ago.. Club members, who pay a fee to shop there, bought cheaper items and traffic from business customers slowed. The results were especially disconcerting to Wall Street since Sam's Club has regularly outperformed Wal-Mart's discount stores.. "When you see a slowdown in sales and then pressure in traffic, that causes investors to be cautious," Brian Yarbrough, analyst at Edward Jones, said of Sam's Club.. Traffic at Wal-Mart's US stores was essentially flat, as shoppers consolidated trips due to higher gasoline prices.. Adding to Wal-Mart's worries, the world's largest retailer also said it has opened internal inquiries or investigations into bribery allegations in Brazil, China and India—additions to its original probe in Mexico. A New York Times article in April disclosed alleged bribery at its Mexican unit.. "We fear this could spread further and be much bigger than just Mexico," Janney Capital Markets analyst David Strasser said.. Chief financial officer Charles Holley declined to comment further on the issue during a conference call with reporters.. So far the total cost of the probe has reached $98 million this year.. Wal-Mart shares were down 3.6 per cent at $68.73 in Thursday afternoon trading on the New York Stock Exchange as investors absorbed the details of how the global economic slowdown is hitting the company.. "Whether you're in the UK or you're in Argentina, Mexico or China or the US or Canada, I think that all consumers are starting to be under some kind of pressure," Holley said on the conference call.. Wal-Mart did say that US sales so far this month were better than expected, a good sign heading into the holiday shopping season.. In the tough economy, Wal-Mart is still well placed to cater to budget-conscious shoppers, said Natalie Berg, director of global research at Planet Retail.. "But at the end of the day, consumers are still very wary about parting with their hard-earned cash," she said.. Total sales rose 3.4 per cent to $113.20 billion for the third quarter ended October 31. Analysts, on average, looked for $114.96 billion, according to Thomson Reuters I/B/E/S. Excluding the impact of currency fluctuations, sales would have been $114.9 billion, the company said.. Sales at Wal-Mart US stores open at least a year, or same-store sales, rose 1.5 per cent. The company had forecast an increase of 1 per cent to 3 per cent, and analysts, on average, had looked for a 1.8 per cent gain as management expressed optimism during a recent meeting with analysts.. In contrast, rival Target Corp on Thursday reported a quarterly profit that beat analysts' expectations, luring shoppers with a wider variety of food products and 5 per cent discounts for its cardholders.. While shoppers put millions of dollars of merchandise on layaway, those sales are not registered by Wal-Mart until the items are paid in full. That typically occurs in the fourth quarter, closer to the end of the holiday season.. Traffic at the US stores rose only 0.1 per cent as shoppers consolidated trips due to higher gasoline prices.. The Wal-Mart US unit forecast a 1 per cent to 3 per cent increase in same-store sales for the fourth quarter.. Sam's Club results also disappointed, with same-store sales rising 2.7 per cent, excluding gasoline sales, compared with a 5.7 per cent increase a year earlier.. Overall, the world's largest retailer earned $3.64 billion, or $1.08 per share, in the third quarter ended October 31, up from $3.34 billion, or 97 cents per share, a year earlier.. Analysts, on average, forecast $1.07 a share.. International sales rose 2.4 per cent to $33.16 billion, and would have risen 7.6 per cent without currency fluctuations, the company said. Operating profit rose 4.8 per cent.. Traffic declined 7.6 per cent at its stores in China, continuing a string of declines, and it is facing challenges in Japan due to the economy. Sales there fell 1.8 per cent and traffic declined 1.7 per cent.. Copyright: Thomson Reuters 2012

Wal-Mart sales under global pressure

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