Wal-Mart cuts outlook due to store closings, Sam's Club weakness
By Dhanya Skariachan
NEW YORK (Reuters) - Wal-Mart Stores Inc (WMT.N: Quote) said on Friday that bad weather and reduced food stamp benefits in the United States had dragged down comparable-store sales in the fiscal fourth quarter, more than offsetting a positive bump from the holiday season.
The news came the same day the world's largest retailer shaved its quarterly outlook to account for special items, including those tied to its store closures in Brazil and China and its Sam's Club restructuring in the United States.
It now expects earnings for the fourth quarter ending January 31 to be at or slightly below the low end of its previous forecast of $1.60 to $1.70 a share.
"Wal-Mart caters to lower-income consumers which have been hit disproportionately hard relative to higher-income consumers," said Morningstar analyst Ken Perkins.
About 20 percent of the company's shoppers are food stamp users, analysts have estimated.
About one in seven Americans took a hit in 2013 when the federal food stamps program was cut by more than $5 billion. Additional cuts are expected this year.
Wal-Mart is also facing serious "competitive threats" from dollar stores and other small-format stores, Perkins added.
The retailer now expects to report lower sales at stores open at least a year for Walmart U.S. and Sam's Club for the quarter. It had previously expected Walmart U.S. same-store sales to be relatively flat and Sam`s Club same-store sales, without fuel, to be flat to up 2 percent. Continued...