Energy Costs Hurt Wal-Mart

BENVONVILLE, AR-Wal-Mart Stores officials say they were disappointed with their US sales during the company’s second quarter. Wal-Mart stores posted a 1.5% same-store sales increased year over year for the period, while comparable sales including Sam’s Club warehouse stores were up 1.7%.

The main reason for the lagging results was consumer hesitancy due to rising gas and energy costs, executives say. “Customers tell us they are most concerned about gas prices,” said Lee Scott, president and chief executive officer, during a conference call.

The hope is for Wal-Mart executives that a massive store renovation program will liven up sales. During the past three years the retailer has averaged 300 remodels annually, but the company will now try to undertake about 1,800 during the next 18 months. Areas of stores that will get particular attention are apparel, electronics and home departments.

Net sales for the company reached $84.5 billion for the quarter, which ended July 31, an 11.3% increase from the same year-ago period. International sales got the biggest lift, rising 31.9% on sales of about $18.7 billion. Sales abroad were boosted by acquisitions in Brazil, Central American and Japan. Meanwhile, the retailer is taking a net loss of $863 million on the sale of its German and South Korean businesses.

Income from continuing operations came in at just under $3 billion, a 4.6% rise from the same year-ago period, while earnings per share were 72 cents, up from 68 cents. For the third quarter, executives are expecting earnings per share to come in at between 59 cents and 63 cents. For the year, guidance remains between $2.88 and $2.95.

Wal-Mart’s shares closed yesterday at $44.55, slightly down from the week-high of just over $45.