Wal-Mart Gears Up For Weak Sales

The retailer saw a rise in Q3 profits but expects coming quarters to be less profitable.

• Wal-Mart Stores, Inc.

  Thu Nov 13 2008 14:37 EST

  

  $53.09

  $+0.47

  +0.89%

  

  • 1 day
  • 3 mo
  • 1 year
  • Advanced

  Tearsheet | Chart | News

• Target Corp.

  Thu Nov 13 2008 14:37 EST

  

  $32.87

  $-0.41

  -1.23%

   

  • 1 day
  • 3 mo
  • 1 year
  • Advanced

  Tearsheet | Chart | News

• J.C. Penney Co. Inc.

• McDonald's Corp.

It's a mixed Thursday for Wal-Mart: Its earnings jumped 6.9% in the third quarter, but it also cut its outlook due to the weak economy and fluctuating exchange rates.

"The rapid changes in currency exchange rates during the last few weeks are projected to negatively affect this year's fourth-quarter results by approximately six cents per share," said Tom Schoewe, chief financial officer, in a statement. "In U.S. dollar terms, strong operating performance [internationally] may be overshadowed by these currency fluctuations."

The Bentonville, Ark.-based retailer said it now expects earnings from continuing operations during its fiscal year, which ends on Jan. 31, to range between $3.42 and $3.46. In August, had expected $3.43 to $3.50 per share. Analysts surveyed by Thomson expected $3.49 per share.

Shares of Wal-Mart (nyse: WMT - news - people ) fell 2.3%, or $1.19, to $51.43, in early-morning trading.

Still, the company is doing better than its competitors, thanks to its renewed focus on low prices, which is attracting financially squeezed shoppers around the world. Anticipating weak holiday sales, Wal-Mart said it would start its Christmas season early and cut prices on several toys in 3,500 American stores as a way to woo shoppers during the important year-end period.(See "Wal-Mart Toys With Xmas Strategy.")

Wal-Mart's recession-friendly strategy has been paying off for its investors. Wal-Mart's shares have enjoyed a 22.7% gain over the past 12 months, Target (nyse: TGT - news - people ) has fallen off 43.8% and J.C. Penny (nyse: JCP - news - people ) has tumbled 62.4%.

Wal-Mart said that earnings rose to $3.14 billion, or 80 cents per share, in the third quarter, which ended Oct. 31. That compares with $2.9 billion, or 70 cents per share, a year earlier.