BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Business  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
E-Commerce
Economy
Market Data
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Wednesday, 13 November, 2002, 15:42 GMT
Wal-Mart forecast unsettles market
Inside a Wal-Mart store
Wal-Mart may have to offer bigger discounts
Wal-Mart, the world's largest retailer, has unnerved the market after it reported solid results for the past three months but gave a cautious outlook.

The US retailer beat most estimates with a 23% jump in profits for the three months to the end of October.

But its forecasts for the coming holiday period were at the lower end of expectations.

This has prompted some analysts to suggest the group will have to resort to sharp discounting to keep customers spending.

Full trolley

Wal-Mart has more than 3,200 stores in the US and a further 1,100 internationally, including the Asda chain in the UK.

For the three months to 31 October, the group earned $1.8bn (1.1bn).

This was slightly higher than analysts had been expecting after the group was forced to cut its estimates for September saying they had been "too optimistic".

Bryan Place, the principal at fund manager Place Financial Advisors, said the three-month result "wasn't a blow-out number, but it wasn't a number that would scare shareholders".

Cheap offers?

However, analysts were concerned by the retailer's projections for the coming three months.

This includes the crucial Christmas trading period.

Wal-Mart stuck to its sales estimates of between 3% and 5% growth.

But its earnings forecast, or the amount of money it makes on sales, was at the lower end of forecasts.

"It's clear that the company is going to offer very sharp price (discounts) to drive customer traffic," said Bill Dreher, retail analyst at WR Hambrecht.

Wary investors

Discount groups such as Wal-Mart have sustained the weak economy by attracting shoppers with their value offering.

But there is now concern that they will have to make even bigger cuts to sustain their growth.

"While sales will be respectable, the lower prices necessary to drive traffic will filter through to earnings," said Mr Dreher.

Investors appeared wary of the shares following the results, with shares up just 0.8% in early trading, or 45 cents, at $54.30.

See also:

30 Sep 02 | Business
13 Sep 02 | Business
13 Aug 02 | Business
13 Aug 02 | Business
22 Jul 02 | Business
14 May 02 | Business
01 Apr 02 | Business
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes