BENTONVILLE, Ark. - Wal-Mart Stores Inc. (WMT) reported its fiscal third-quarter earnings slipped 1.5 percent but it eked out its first gain in nearly two years in a key revenue measure for its U.S. business.
The world's largest retailer, however, issued a fourth-quarter profit outlook that missed Wall Street expectations because of expected fierce holiday discounting.
Walmart faces challenges on many fronts, from a slowly recovering economy that hasn't benefited its low-income shoppers and fierce competition from online king Amazon.com, dollar stores and grocers. It's also dealing with shoppers seeking the convenience of small stores or buying on their mobile devices and PCs.
To win its share of its holiday dollars, Walmart announced an aggressive holiday plan that includes free shipping on the top 100 items and price cuts on 20,000 items. Starting Friday, Walmart will start to match its online prices with Amazon. Previously, it matched prices only with local stores.
"Being the price leader is an ongoing priority for us and a commitment to our business," said Doug McMillon, who took over as CEO in February. "And with every year, that is even more important during the holiday season."
Walmart reported earnings of $3.71 billion, or $1.15 per share, for the three months that ended Oct. 31.
The company, which is based in Bentonville, Arkansas, posted revenue of $119 billion in the period, beating Wall Street forecasts. Analysts expected $118.35 billion, according to Zacks.
Walmart's U.S. discount division, which accounts for 60 percent of the company's total sales, posted a 0.5 percent increase in revenue at stores open at least a year. That was the first increase in seven quarters and came despite a continued decline in store traffic.
Walmart's overall U.S. business eked out a 0.5 percent increase, including a 0.4 percent increase at Sam's Club division.
Walmart said that it expects earnings per share to be in the range of $1.46 to $1.56, which includes the negative impact of closing underperforming stores in Japan. Analysts had expected $1.57 per share.
The company expects full-year earnings to be $4.92 to $5.02 per share. Analysts expect $4.99 per share, according to FactSet.
Shares rose more than 2 percent, or $1.80 to $81 in premarket trading.