Wal-Mart’s Q4 profit up 8.6%; outlook wary

Wal-Mart Stores Inc offered a weak business outlook today as new economic challenges for its low-income shoppers start to take a toll.

The world’s largest retailer said its fourth quarter profit rose 8.6 per cent. But higher gasoline prices and late tax refunds and the payroll tax increase in the US have it wary about the coming year.

Investors were already bracing for a subdued report after a Bloomberg report last week on an email from a top executive characterising the first two weeks of February as “a total disaster.”

Wal-Mart’s latest results cover the three months that ended January 31.

The US-based Wal-Mart is considered an economic bellwether because the retailer accounts for nearly 10 per cent of non-automotive retail spending in the US low and lower middle-income people have continued to struggle even as the housing and stock markets improve.

Wal-Mart acknowledged in today’s report that February started “slower than planned” but noted that it was largely due to the delay in tax refund checks.

For the current quarter, Wal-Mart expects revenue at stores open at least a year at its US namesake business to be flat with last year.

That represents a slowdown from the 1 per cent increase in the fourth quarter.

The results come a little more than a year after Wal-Mart’s US namesake business turned a corner by reemphasising low prices and restocking stores with thousands of basic items that it had gotten rid of in an overzealous bid to reduce clutter.

During the third quarter of 2011, the division reversed nine straight quarters of declines in revenue at stores open at least a year, considered a key measure of a retailer’s health.

The US namesake business has now recorded six consecutive quarters of gains since the division rebounded.

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