Wal-Mart 1Q earnings rise 3 pct; US still slumping

NEW YORK — Growing overseas business and strict cost controls helped Wal-Mart Stores Inc.'s net income rise 3 percent in the first quarter, beating Wall Street expectations.

But the world's largest retailer's U.S. Walmart stores posted their eighth straight quarter of revenue declines at stores open at least a year compared with the same quarter a year earlier. That's a key measure of a retailer's health.

The company also offered a cautious earnings outlook because of worries that higher prices for gasoline and groceries could put more strain on its low-income customers.

"We are monitoring the economic environment carefully, as significant changes in gas prices and inflation during the quarter will influence our actual performance," Bill Simon, Walmart U.S. president and CEO, said in a statement.

Wal-Mart reported net income of $3.39 billion, or 97 cents per share, in the three months ended April 30. That compares with $3.3 billion, or 87 cents per share, in the same period last year.

Revenue, excluding revenue from membership fees from Sam's Club warehouse stores, rose 4.4 percent to $103.41 billion.

Analysts expected earnings of 95 cents on revenue of $102.76 billion, according to FactSet.

Wal-Mart's US division posted a 0.3 percent drop in revenue at stores open at least a year, dragged down by a 1.1 percent drop at its namesake stores. That measure rose 4.2 percent at Sam's Clubs.

Wal-Mart's U.S. business is hurting because of mistakes the company made on price and selection. Wal-Mart also faces increasing price competition from dollar chains, Amazon.com and other online retailers.

Wal-Mart is trying several strategies to revive U.S. growth, bring back disaffected customers and draw new ones. It is restoring thousands of items it had stopped carrying in an overzealous bid to streamline its stores, from fishing supplies in Dallas to snow blowers in Minneapolis. The company is highlighting the returning items with flags on store shelves trumpeting "It's Back."

Wal-Mart also is hammering its return to the "Every Day Low Price" message of founder Sam Walton with a new ad campaign. And it plans to open smaller stores store under a concept it calls Walmart Express.

Wal-Mart's international business, which produces 26 percent of company revenue, has been a bright spot.

The international division's revenue rose 11.5 percent to $27.9 billion in the first quarter.