Wal-Mart Q2 profit rises 3.6%, same-store sales fall more than expected
Bentonville, Ark. Wal-Mart Stores reported Tuesday that it posted a profit of $3.59 billion in the second quarter, a 3.6% increase over net income of $3.47 billion in the year-ago period.
The company cited aggressive cost-cutting and robust growth in China, Brazil and Mexico for the improved earnings.
However, same-store sales for the quarter ended July 31 disappointed Wall Street, falling 1.4% instead of the 0.26% expected by analysts. At Wal-Mart's namesake stores, same-store sales fell 1.8%, while at Sam's Clubs the measure was up 1%.
The 1.4% overall decline in same-store sales marked the fifth straight quarterly drop for the world’s largest retailer.
Revenue rose almost 3% to $103.7 billion. Analysts had expected revenue of $105.3 billion.
"We continue to focus on our priorities of growth, leverage and return," said Mike Duke, Wal-Mart Stores' president and CEO, said in a statement. "The slow economic recovery will continue to affect our customers, and we expect they will remain cautious about spending."
Like other discounters, Wal-Mart benefited from the downturn as consumers tightened belts and traded down. However, as the economy has turned the corner, shoppers are starting to trade back up again. Besides the loss of some of its more affluent shoppers, Wal-Mart is also impacted by lower-income customers who continue to be squeezed by unemployment and tight credit conditions.