NEW YORK (AP) — Wal-Mart Stores Inc.'s first-quarter net income rose 10 percent as the world's largest retailer benefited from cost-cutting and robust growth in its international business.
But Wal-Mart said a key measure of revenue dropped for the fourth consecutive quarter as it continued to see a decline in customer counts at its U.S. namesake stores.
It also offered a muted outlook for the current quarter as shoppers worry about jobs and their finances.
Wal-Mart said Tuesday, May 18 that net income was $3.32 billion, or 88 cents per share for the period ended April 30. That compares with $3.02 billion, or 77 cents per share in the same quarter last year.
Revenue rose almost 6 percent to $99.85 billion, from $94.24 billion.
Analysts surveyed by Thomson Reuters expected profit of 84 cents per share on revenue of $98.45 billion for the period.
Revenue at stores open at least a year dropped 1.1 percent, dragged down by its U.S. namesake division. The measure is a key indicator of a retailer's health since it excludes the effect of expansion. Wall Street analysts had expected a 0.6 percent decline.
Wal-Mart, which generates more than $400 billion in sales annually, is considered a key barometer of consumer spending, so economists closely monitor sales trends at the discounter that could indicate the shape of the nation's economic recovery. But the retailer's latest figures show that the average consumer is still struggling.
“Our customers, particularly in the United States, are still concerned about their personal finances and unemployment, as well as higher fuel prices,” Mike Duke, Wal-Mart’s president and CEO, said in a statement. “Our commitment to reducing prices and managing expenses positions us well across the retail landscape.”
Wal-Mart benefited during the recession as affluent shoppers traded down to cheaper stores from mall-based stores. In recent months, the discounter has faced increasing competition from all types of retailers, which aggressively lowered prices.
Meanwhile, analysts worry that its newly acquired customers are going back to their old favorites as the economy recovers, while the discounter's core customers are still struggling.
The company, which in the fourth quarter had seen a decline in customer traffic and reported its first year-over year quarterly drop in total revenue at its U.S. namesake stores since the company went public in 1969, stepped up its discounting in the first quarter.
But the company said Tuesday that customer counts at its U.S. namesake stores declined compared with the same quarter last year, though the weakness was partially offset by an increase in the average transaction.
The company announced Tuesday more price cutting across all grocery categories.
Another key factor hurting Walmart’s U.S. stores was the company's move over the last year to offer fewer brands as part of a campaign to declutter its stores, company officials acknowledged during a prerecorded conference call. Now, the company is adding back some of the merchandise to bring back shoppers who went elsewhere for those brands.