Wal-Mart: 4Q, full-year profits may now be at or slightly below low end of prior outlooks

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BENTONVILLE, Ark. – Wal-Mart said Friday that key earnings figures may come in at the low end or below its prior forecasts for its fourth quarter and full fiscal year. It also said a widely-watched sales metric for the fourth quarter which includes the holiday season will be lower than its previous forecast.

The news initially sent Wal-Mart shares lower but they were up by early afternoon.

The world’s biggest retailer said the lower earnings outlook reflect accounting for some Brazil-related charges and other items. Chief Financial Officer Charles Holley said in a statement that these items were not anticipated when Wal-Mart previously provided its forecasts.

The lowered outlook for sales at stores open at least a year was due in part to eight winter storms that resulted in some store closings, Holley said. He added that its Sam’s Club locations were hurt by weather throughout the quarter.

The sales performance was also hindered by a bigger-than-expected impact from the federal government’s reduction in Supplemental Nutrition Assistance Program benefits that went into effect on Nov. 1, Holley said.

Wal-Mart didn’t provide specific numbers to go with its revised forecasts.

The retailer only said that its fiscal fourth-quarter and full-year adjusted earnings from continuing operations may come in at or slightly below the low end of its prior forecasts. It previously projected fourth-quarter adjusted earnings from continuing operations between $1.60 and $1.70 per share. Its 2014 guidance was for $5.11 to $5.21 per share.

Analysts surveyed by FactSet predict fourth-quarter earnings of $1.65 per share and full-year earnings of $5.16 per share.

It also said sales — excluding fuel — at Walmart and Sam’s Club locations in the U.S. open at least a year would be slightly below its prior forecasts. The chain previously expected the key sales figure would be relatively flat at its namesake locations in the U.S. and that it would be between flat and 2 per cent at Sam’s Club. Sales at stores open at least a year is a closely-watched indicator of a retailer’s health.

Shares of Wal-Mart Stores Inc. had fallen as low as $73.64 in morning trading on the news but were up 22 cents to $74.97 in afternoon trading Friday.

The revisions came less than a week after Wal-Mart announced that it was eliminating 2,300 workers at its Sam’s Club division. The layoffs, which cut 2 per cent of the membership club’s U.S. employee count of about 116,000, mark the largest since 2010 when the Sam’s Club unit laid off 10,000 workers as it moved to outsource food demonstrations at its stores.

Wal-Mart, which has 11,096 stores, said that it will provide detailed fourth-quarter and full-year financial results as well as guidance for fiscal 2015 on Feb. 20.

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