Higher customer traffic boosts Wal-Mart's sales in holiday quarter

Tue Feb 21, 2017 12:04pm EST
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By Nandita Bose

CHICAGO (Reuters) - Wal-Mart Stores Inc (WMT.N: Quote) reported higher-than-expected U.S. sales on Tuesday for the crucial holiday quarter as its low prices attracted more customers to its stores and online activity accelerated.

Shares of the world's largest retailer rose more than 3 percent as its results bucked a string of disappointing holiday sales figures from rivals including Target Corp (TGT.N: Quote), which is due to report earnings on Feb. 28.

Investors shrugged off an 8 percent drop in gross profit margins stemming from Wal-Mart's continued efforts to cut prices to make them more competitive, along with discounts offered after the holiday season.

"A number of things helped Wal-Mart over the holiday quarter," said Neil Saunders, managing director of retail research firm Global Data. "Foremost among these was the strategic decision to invest in price and to heavily promote this fact to consumers."

Wal-Mart said it expected earnings per share of 90 cents to $1 for the current quarter and $4.20 to $4.40 for this fiscal year. Analysts' estimates were within both ranges.

A delay in refund checks from the U.S. Internal Revenue Service has curbed customer spending somewhat, Chief Financial Officer Brett Biggs said on a conference call with reporters. However, he still expects U.S comparable sales - those at stores open at least a year and through e-commerce - to rise 1 percent to 1.5 percent this quarter.

The company said U.S. comparable sales rose 1.8 percent, excluding fuel price fluctuations, during the fourth quarter ended on Jan. 31. Analysts on average were expecting a 1.3 percent increase, according to research firm Consensus Metrix.

Under Chief Executive Officer Doug McMillon and new e-commerce chief Marc Lore, Wal-Mart has been trying to catch up with online rival Amazon.com Inc (AMZN.O: Quote). In October, the company said it would slow the pace of new store openings to focus on expanding its e-commerce business.   Continued...

Shopping carts are seen outside a new Wal-Mart Express store in Chicago July 26, 2011. REUTERS/John Gress/Files