By Nandita Bose
CHICAGO (Reuters) - Wal-Mart Stores Inc (NYSE:WMT) on Thursday reported lower-than-expected quarterly sales at established U.S. stores, citing declining food prices and warmer-than-usual temperatures that curbed demand for seasonal items.
Shares of Wal-Mart, the world's largest retailer, fell 4.1 percent as investors shrugged off strong online sales growth and a smaller-than-expected decline in earnings.
Burt Flickinger, managing director of retail consultancy Strategic Resources Group, said investors should be more patient as Wal-Mart has taken the right steps to fix its business by raising workers' hourly wages, improving operations with cleaner stores and focusing on increasing e-commerce sales.
"The Street is making a myopic mistake of punishing Wal-Mart's shares today over quarterly sales and profits," he said.
Wal-Mart raised the low end of its fiscal-year profit forecast, in line with Target Corp (NYSE:TGT) and other rivals that expressed optimism ahead of the holiday shopping season.
Chief Financial Officer Brett Biggs said declining prices for eggs and other important products for a food retailer remained challenging, and unseasonably warm weather hurt sales in the back half of the quarter.
Wal-Mart's sales at U.S. stores open at least a year rose 1.2 percent, excluding fuel price fluctuations, in the third quarter ended on Oct. 31. That was weaker than market expectations of a 1.3 percent rise, according to research firm Consensus Metrix.
Comparable food sales fell 1.5 percent, versus a 1 percent decrease in the second quarter.
U.S. store visits rose 0.7 percent, slowing from increases of 1.7 percent a year earlier and 1.2 percent in the second quarter.
Net income attributable to Wal-Mart fell more than 8 percent to $3.03 billion, or 98 cents per share, from $3.3 billion, or $1.03 per share, a year earlier. Analysts on average expected 96 cents per share, according to Thomson Reuters I/B/E/S.
Net sales rose 0.5 percent to $117.2 billion.
Online sales increased 20.6 percent, accelerating from the previous quarter. That business added 50 basis points to third-quarter comparable sales, its biggest contribution to date.
To try to narrow the gap with online leader Amazon.com Inc (NASDAQ:AMZN) and increase its dominance in retailing, Wal-Mart has invested heavily in e-commerce, acquiring startup Jet.com in August for $3 billion.
"The U.S. (e-commerce) results were stronger than those in our key international markets, driven by our marketplace offering ... as well as a contribution from Jet.com," Chief Executive Officer Doug McMillon said.
International sales fell 4.8 percent, hurt by a strong dollar and continued weakness in the UK market, but they were up 2.4 percent on a currency-neutral basis.
At Wednesday's close, Wal-Mart's shares had risen more than 16 percent since the start of the year.