Wal-Mart posts solid quarter

November 17, 2015 09:26 AM

Wal-Mart Stores Inc reported slightly stronger-than-expected quarterly earnings on Tuesday as it booked its fifth straight gain in U.S. same-store sales, sending its shares up nearly 3%.

However, the company also said it expected sales at stores open at least a year to grow more slowly during the current, holiday quarter and that business would be competitive.

Wal-Mart's earnings have been under pressure from costs from boosting entry-level wages, although the company says those investments are translating into better customer service and helping to lift sales.

Net profit attributable to the world's largest retailer fell to $3.304 billion, or $1.03 per share, in the third quarter ended on Oct. 31 from $3.711 billion, or $1.15 per share, a year earlier.

Analysts on average had expected 98 cents per share, according to Thomson Reuters I/B/E/S.

The result included a boost of 4 cents a share from an adjustment of accounting for leases.

Greg Foran, head of the U.S. operations, said in a prerecorded call that the company had added more labor hours into the stores than initially planned during the quarter while also making investments in customer-facing parts of the store.

Reflecting these and other investments, operating income fell 8.8% to $5.7 billion.

Wal-Mart said consolidated revenue fell 1.3% to $117.4 billion, weighed down by its international operations, which have been hurt by a stronger dollar.

Sales at U.S. stores open at least a year rose by 1.5%, while customer traffic increased by 1.7%, the company said.

Foran noted that low food inflation and last year's big drop in fuel prices would make fourth-quarter comparisons difficult.

The company is forecasting same-store U.S. sales growth to slow to 1% in the fourth quarter.

Shares of Wal-Mart were up 2.7% at $59.45 in premarket trading.

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