Wal-Mart (WMT, $51.52, down $4.02) is feeling the blues this morning as Wall Street is punishing the stock after the company cut its fourth quarter earnings forecast. The company now expects earnings of $0.91-$0.94 a share, versus a prior forecast of $1.03-$1.07 a share. Wal-Mart blamed bad weather and lower consumer discretionary spending for the lowered shortfall.
Although December same-store sales still rose 1.7% (excluding fuel), Wall Street was expecting a 2.8% increase. Even the world’s largest retailer couldn’t pull a rabbit out of the hat as both Wal-Mart and Sam’s Club saw slower traffic. For January, the company sees sales flat to up to 2%.
Shares of Wal-Mart Stores dropped nearly 10% to $50.31 shortly after the open, its biggest decline since February 2000. Wow. The stock did well in 2008 as it gained 25% by October, hitting $60 a share. Since then Wal-Mart has managed to trade in the mid to high 50’s but today it’s the one getting “rolled back” not the merchandise.
The market had a nasty session yesterday as the Dow gave back most of it gains for 2009 after Alcoa (AA, $11.01, up $0.12), Intel (INTC, $14.46, up $0.02) and Time Warner (TWX, $10.15, down $0.14) each made negative headlines.
Rick Rouse
Rick@OptionsMentoring.com
