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A Wal-Mart Stores Inc company distribution center in Bentonville, Arkansas in this file photo from June 6, 2013. REUTERS/Rick Wilking/Files

Wal-Mart cuts forecast as it spends more on healthcare, online

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News Grand Forks,North Dakota 58203 http://www.grandforksherald.com/sites/default/files/styles/square_300/public/field/image/2014-08-14T214453Z_1_LYNXMPEA7D0XJ_RTROPTP_4_WALMART-RESULTS.JPG?itok=E3IzTN_1
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Wal-Mart cuts forecast as it spends more on healthcare, online
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Aug 14 (Reuters) - Wal-Mart Stores Inc cut its full-year profit forecast, citing higher employee healthcare costs and increased investment in its online business, and the company said heavy discounting was likely to continue into the holiday shopping season.

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As expected, the world's largest retailer also reported flat U.S. same-store sales, excluding fuel, for the second quarter - the sixth quarter of declining or no growth.

Wal-Mart, whose shares were down slightly at $73.90 in early trading, blamed intense competition and weak consumer spending for sluggish U.S. same-store sales.

" ... Consumers are still concerned about cost of living and employment," Chief Financial Officer Charles Holley said on a conference call on Thursday.

U.S. retail sales in July were the weakest since January, data showed on Wednesday.

Wal-Mart is investing heavily in its e-commerce business to improve sales, trying to play catch-up in a market dominated by Amazon.com Inc.

Wal-Mart named a new head for its online business in June, as part of plans to integrate the business with its network of brick-and-mortar stores.

Online sales grew 30 percent to more than $10 billion last year, but accounted for just a fraction of Wal-Mart's net sales of $473 billion.

Wal-Mart said it expected online sales to grow 25 percent in the year ending January.

Department store operator Kohl's Corp said on Thursday its quarterly same-store sales fell 1.3 percent, while Macy's Inc cut its full-year same-store sales forecast on Wednesday.

J.C. Penney Co Inc is scheduled to report results on Thursday after markets close.

HEALTHCARE COSTS SOAR

Wal-Mart said it expected to spend $500 million on U.S. healthcare this year, up from $330 million estimated in February, as enrollments and medical costs rise.

Of its nearly 2.2 million employees, about 1.4 million are in the United States.

Revenue rose by a better-than-expected 2.8 percent in the second quarter ended July 31 as sales increased at small-format stores.

"We're encouraged by the performance of our small-format stores and e-commerce, areas where we're investing significantly this year," Chief Executive Doug McMillon said in a statement.

Wal-Mart cut its full-year forecast for earnings from continuing operations to $4.90-$5.15 per share from $5.10-$5.45. This includes a 5-7 cents per share impact from spending on its online business.

Net income attributable to Wal-Mart rose to $4.09 billion, or $1.26 per share, from $4.07 billion, or $1.24 per share, a year earlier.

Earnings from continuing operations attributable to Wal-Mart were $1.21 per share, matching the average analyst estimate, according to Thomson Reuters I/B/E/S.

Total revenue rose to $120.13 billion from $116.83 billion.

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