Wal-Mart's 4Q profit rises; U.S. sales still slump

NEW YORK — Wal-Mart Stores Inc. reported a 27 percent increase in fourth-quarter net income as the world's largest retailer benefited from cost-cutting and strong sales overseas.

But a key revenue measure in the company's U.S. business fell for the seventh quarter in a row and came in worse than Wal-Mart's own projection.

"Some of the pricing and merchandising issues in Wal-Mart ran deeper than we initially expected, and they require a response that will take time to see results," CEO and President Mike Duke said in a statement.

Wal-Mart posted net income of $6.06 billion, or $1.70 per share, in the quarter ended Jan. 31. That compares with $4.76 billion, or $1.25 per share, a year earlier.

Total revenue rose 2.4 percent to $116.3 billion. Net sales, excluding membership and other income, increased 2.5 percent to $115.6 billion.

Revenue at stores opened at least a year fell 1.1 percent, dragged down by a 1.8 percent drop at the namesake discount stores, which account for more than 60 percent of its business. Analysts had expected a 0.8 percent increase, according to FactSet, but worries on Wall Street mounted in recent days after reports of a weak holiday season.

Excluding one-time items including a tax benefit, earnings were $1.34 per share. Analysts expected earnings of $1.31 per share on net sales of $117.52 billion.

The company said that it is accelerating initiatives like expanding in urban markets and bolstering its online business to turn around U.S. sales. But the downbeat fourth-quarter revenue report raised doubts that turnaround will come this year.

Wal-Mart executives had told investors in November that the holiday quarter would mark the end of the streak in declining revenue.

Over the past year, the company scrambled to add back thousands of products it had culled as part of a renovation of its stores. In recent months, it went back to emphasizing low prices across the store.

Wal-Mart's disappointing holiday report shows that those changes are taking time to lure back shoppers who defected to rivals.

Wal-Mart's funk contrasts with where it found itself at the beginning of the recession in late 2007. Unlike most stores, Wal-Mart thrived. Its core customers — households making less than $70,000 a year — bought more. Affluent shoppers became price-conscious and discovered Wal-Mart's prices were hard to beat.