Wal-Mart is running out of excuses

It keeps blaming disappointing results on things like delayed tax refunds, even though its rivals are doing better despite the same headwinds.

• Share

  102
• Share

  57

• 192

Shares of Wal-Mart (WMT -2.03%) slumped in early trading Thursday after the world's largest retailer posted earnings that lagged analysts' estimates and issued guidance that fell short of consensus forecasts -- yet again -- because of what CEO Mike Duke described as "considerable headwinds." Its rivals, though, seem to be doing better.

Among Wal-Mart's lackluster data points, first-quarter net income rose 1.1% to $3.78 billion, or $1.14 per share, versus $3.74 billion, or $1.10 per share, a year earlier. Sales increased 1% to $113.4 billion. Analysts surveyed by Bloomberg expected profit of $1.14 per share on revenue of $116.1 billion. U.S. comparable-store sales, a key retail metric measuring revenue at stores open at least a year, fell 1.4%.

The company forecast a profit in the current quarter of $1.22 to $1.27, below the $1.29 analysts had expected.

As it has done before, Wal-Mart attributed its mediocre performance to a delay in the IRS issuing income tax refunds, an increase in the payroll tax and less grocery inflation. However, Wal-Mart's competitors are facing these same problems and are faring better. That's only heightening the pressure on Duke to improve the company's financial performance.

Kohl's (KSS +4.59%), for one, reported better-than-expected​ earnings, and its stock is moving in the opposite direction of Wal-Mart's. It expects comparable-store sales to increase as much as 2% in the current quarter after a 1.9% decline in the last quarter. TJX (TJX -1.78%), the parent company of TJ Maxx, saw its same-store sales rise 8% in the four-week period ending May 4. But it expects its growth rate to slow in the current quarter to a range of 1% to 2%, which disappointed Wall Street.

Wal-Mart does see better times ahead. It says U.S. same-store sales will jump as much as 2% in the current quarter. If the discount retail colossus can't meet those modest expectations, Wall Street will not be pleased.