Wal-Mart's profit falls 21 percent; outlook weak

NEW YORK - Wal-Mart Stores Inc. (WMT) offered a weak profit outlook, signaling that it expects economic pressures to keep weighing on its low-income shoppers around the world.

The world's largest retailer also said Thursday that its fourth-quarter profit, which covers the crucial holiday season, dropped 21 percent. Its Wal-Mart stores recorded their fourth consecutive quarter of declines in revenue at stores open at least a year.

The company, based in Bentonville, Arkansas, said it would speed up growth plans for its smaller stores to cater to shoppers looking for more convenience. It will now open 270 to 300 small stores during the current fiscal year. That's double the initial forecast for adding 120 to 150 stores.

"Customers' shopping habits are changing more rapidly than ever before," said Wal-Mart CEO and President Doug McMillon on a prerecorded call. He succeeded Mike Duke as CEO on Feb. 1. "We must be more nimble and flexible as we operate our businesses to adapt to these changes."

Wal-Mart, the first of a slew of major retailers reporting fourth-quarter results, offers troubling signs for the economy. Wal-Mart is considered an economic bellwether, with the company accounting for nearly 10 percent of nonautomotive retail spending in the U.S.

The company offered a litany of factors that are weighing on shoppers. They've been dealing with a 2 percentage point increase in the Social Security payroll tax since Jan. 1, 2013. And the discounter acknowledged that the Nov. 1 expiration of a temporary boost in government food stamps is also hurting customers' ability to spend.

On top of that, a series of winter storms have also chilled sales as Wal-Mart was forced to close some stores- or shoppers just didn't want to venture out in the cold. The company said revenue at stores open at least a year fell in the first two weeks of February, the beginning of the first quarter, because of the severe weather. It said that at the height of the storms, it had more than 200 stores closed.

These factors played out in the fourth-quarter earnings results.

Wal-Mart said that it earned $4.43 billion, or $1.36 per share, in the quarter ended Jan. 31. That compares with $5.6 billion, or $1.67 per share, a year earlier.

Excluding charges related to closing stores in Brazil and China, Wal-Mart earned $1.60 per share.

Net revenue was up 1.4 percent to $128.79 billion.

Analysts were expecting $1.59 per share on revenue of $129.9 billion, according to FactSet.

Revenue at stores open at least a year fell 0.4 percent, the fourth consecutive quarterly decline.

The company expects that earnings for the current quarter will come in between $1.10 per share and $1.20 per share. For the full year, it expects earnings per share to be $5.10 per share and $5.45 per share.

Analysts expected $1.23 per share for the first quarter, and $5.56 per share for the year, according to FactSet estimates.