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updated 11/14/2013 8:57:16 AM ET 2013-11-14T13:57:16

(Reuters) - Wal-Mart Stores Inc on Thursday reported its third straight quarterly decline in U.S. comparable sales, hurt by a drop in shopper visits, and the world's largest retailer gave a disappointing profit forecast for the holiday season.

The company said comparable sales at its U.S. stores, its biggest unit, fell 0.3 percent in the third quarter ended on October 31 in part because of disappointing toy sales and price reductions on televisions.

Wall Street had expected no change in comparable sales, which include those online and at stores open at least a year. Shares of Wal-Mart fell nearly 2 percent.

"They just can't seem to get things going in the U.S. division," said Edward Jones analyst Brian Yarbrough. "That low-end consumer is just not willing to step out and buy those discretionary items."

Wal-Mart caters to lower-income customers, who have shown a reluctance to spend this year because of higher payroll taxes and slow job growth.

"Some customers feel uncertainty about the economy, government, jobs stability," Chief Executive Officer Mike Duke said in a recording.

Kohl's Corp, a mid-tier department store chain that also serves a price-conscious clientele, said its comparable sales fell 1.6 percent last quarter.

Wal-Mart expects U.S. comparable sales to be flat during the current holiday quarter.

The company forecast a profit of $1.60 to $1.70 per share for that quarter, while Wall Street analysts were expecting $1.69, according to Thomson Reuters I/B/E/S.

Wal-Mart lowered its full-year forecast and now expects earnings of $5.11 to $5.21 per share, compared with an earlier outlook of $5.10 to $5.30.

ADVERTISING BLITZ

To compete against retailers such as Amazon.com Inc and Target Corp, Wal-Mart began its holiday sales earlier and is advertising more heavily.

In an encouraging sign for the company, Wal-Mart said comparable sales at its expanding fleet of smaller-format U.S. stores rose 3.4 percent.

Overall revenue increased 1.6 percent to $115.69 billion, while Wall Street was expecting $116.8 billion, according to Thomson Reuters I/B/E/S.

International sales rose 4.1 percent to $34.4 billion, excluding any currency impact.

Same-store sales rose 1.1 percent at the company's Sam's Club chain, which has long lagged rival Costco Wholesale Corp. Analysts were expecting a gain of 1.3 percent.

Third-quarter profit from continuing operations rose 2.8 percent to $3.73 billion, or $1.14 per share. That was 1 cent higher than analysts were expecting.

Shares of Wal-Mart were down 1.7 percent at $77.54 in trading before the market opened.

(Reporting by Phil Wahba in New York; Editing by Lisa Von Ahn)

(c) Copyright Thomson Reuters 2013. Check for restrictions at: http://about.reuters.com/fulllegal.asp

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