Low Bar Set for Wal-Mart

Times are tough at Wal-Mart (WMT), and the retailing behemoth's first-quarter earnings report likely will do little to inspire Wall Street.

The Bentonville, Ark., giant, which reports results before the bell Tuesday, is expected to post earnings of 68 cents a share on revenue of $87.1 billion, according to Thomson Financial. Wal-Mart has already warned, however, that its forecast of 68 cents to 71 cents would be difficult to achieve because of a tough sales environment in April.

The month indeed turned out to be tough for the world's largest retailer. Same-store sales slid 3.5%, significantly worse than the 1.1% drop Wall Street projected.

Goldman Sachs analyst Adrianne Shapira believes Wal-Mart likely will blame big-picture issues such as rising gas prices, the housing slowdown and lower consumer confidence for its sales woes. But she noted in a recent research report that "a variety of macro indicators continue to remain supportive for consumption (nominal wage growth, unemployment rate)."

Wal-Mart's problems, she maintains, are company-specific.

Wal-Mart isn't sitting back helplessly with subpar results. The company is remodeling stores in an attempt to appeal to a higher-end consumer. Additionally, it is focusing efforts on higher-margin items and departments.

On Monday the company announced an expansion of its electronics offerings, including a plan to sell eBay's (EBAY) Skype phones. Wal-Mart also will sell larger big-ticket items such as Sony (SNE) home-theater systems.