Wal-Mart second-quarter forecast trails estimates on economy

Weather Effect

Cooler temperatures also curtailed demand for spring merchandise in North America. Target Corp., the second-largest U.S. discount retailer, said last month first-quarter profit would be less than it previously forecast as cold weather hampered sales of spring merchandise.

“It has been much cooler than normal, which has an impact on seasonal merchandise,” Brian Yarbrough, an analyst at Edward Jones & Co. in St. Louis, said today in an interview. “A lot of Wal-Mart’s customers buy clothes when they need them. If weather is really a negative impact on the first quarter, we’ll find out in the second quarter because it should even out.”

Kohl’s Earnings

Kohl’s Corp., the third-largest U.S. department-store chain, also cited weather as affecting first-quarter sales while saying that it was able to keep expenses and inventory under control.

The company said today in a statement that first-quarter net income fell 4.5% to $147 million, or 66 cents a share, from $154 million, or 63 cents, a year earlier. Analysts surveyed by Bloomberg estimated 57 cents, on average. Menomonee Falls, Wisconsin-based Kohl’s shares rose 4.5% to $51.92.

Shoppers are getting some relief as gas prices decline. The average U.S. price of a gallon of regular unleaded gas fell to about $3.50 in April from this year’s high of $3.79 in February, according to AAA.

Given the challenges its customers face, Wal-Mart has worked to keep prices low to maintain traffic at its stores. Grocery prices at Wal-Mart fell in the first quarter as part of the retailer’s plan to spend $6 billion to cut prices in the category, according to a study conducted by Bloomberg Industries during the past 22 months.

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