Nov. 15, 2012 at 10:15 AM ET
Wal-Mart Stores Inc reported quarterly sales below analysts' expectations on Thursday, while sales at established U.S. discount stores trailed Wall Street estimates and traffic fell in China.
The company also saw sales in Japan sag as the economy weakened.
"Across all of our markets, we are seeing the same price consciousness as we do in the United States," Chief Executive Mike Duke said in a statement.
Wal-Mart rival Target Corp's quarterly profit beat Wall Street forecasts as the discount chain lured shoppers with a wider variety of food products and 5 percent discounts for its cardholders.
Target said it had earned $637 million, or 96 cents per share, in the third quarter ended on October 27, up from $555 million, or 82 cents a share, a year earlier.
Excluding a gain from the pending sale of its credit card receivables, the profit was 81 cents per share, 4 cents more than what Wall Street analysts were expecting, according to Thomson Reuters I/B/E/S.
The company said it expected to earn between $1.45 and $1.55 a share in the holiday quarter, including expenses linked to its entry into Canada next year. That compares with analysts' forecasts of $1.51.
Target previously said third-quarter sales had increased 3.4 percent to $16.60 billion. Sales at stores open at least a year were up 2.9 percent. That came largely from higher prices and customers buying more items per transaction.
Adding more food to the stores and offering a 5 percent discount to cardholders has attracted shoppers but also weighed on profit rates. Gross margin during the quarter slipped 0.2 points to 30.3 percent of sales.
Target said 14 percent of sales during the quarter were paid for with its debit and credit cards, compared with 9.5 percent a year earlier.
Wal-Mart, the world's largest retailer, said sales so far this month were better than expected in the United States as its low- price strategy has resonated in an economy where unemployment continued to be high.
Sales rose 3.4 percent to $113.20 billion for the third quarter ended October 31. Analysts, on average, looked for $114.96 billion, according to Thomson Reuters I/B/E/S. Excluding the impact of currency fluctuations, sales would have been $114.9 billion, the company said.
Wal-Mart's U.S. arm, by far its largest business, has rebounded from a prolonged slump, posting five consecutive quarters of same-store sales growth after nine straight quarterly declines.
Sales at Walmart U.S. stores open at least a year, or same-store sales, rose 1.5 percent. The company had forecast an increase of 1 percent to 3 percent, and analysts, on average, looked for a 1.8 percent gain as management expressed optimism during a recent meeting with analysts.
Lower prices for some food and electronics pressured sales. At the same time, while shoppers put millions of dollars of merchandise on layaway, the sales are not registered until the items are paid in full. That typically occurs in the fourth quarter, closer to the end of the holiday season.
"The slight deceleration in growth reflects the underlying pressures facing U.S. consumers," said Natalie Berg, director of global research at Planet Retail. "Having made significant improvements to price perception, Walmart today is actually well placed to cater to budget-conscious shoppers. But at the end of the day, consumers are still very wary about parting with their hard-earned cash."
Reuters contributed to this report.