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