Wal-Mart Sees Profit at Low End of Range

The disclosure follows news of weak September sales.
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The steady drumbeat of dismal news coming from

Wal-Mart

(WMT) - Get Report

continued Tuesday when the company lowered guidance for third-quarter earnings.

On a conference call with Wall Street, the world's largest discount retailer said it expects earnings to be at the low end of its previous guidance calling for 52 cents to 54 cents a share for the quarter. It reiterated its forecast for 2004 earnings to come in between $2.36 and $2.40 a share.

Analysts on Wall Street were predicting earnings of 53 cents a share for the quarter. Shares of Wal-Mart were recently down 31 cents, or 0.6%, to $53.

The news came on the heels of Wal-Mart's estimate that comparable sales in September will hit the low end of its range at 2.3% vs. the same month in 2003, when fresh tax rebates and cool weather drove strong sales. That marks the company's second month in a row at the low end of its sales range.

In addition to facing tough comparisons to last year, Wal-Mart appears to be taking a hit from rising gas prices, as oil climbs to new records above $51. Since it caters to lower-income customers with its "everyday low prices," the company's clientele is particularly sensitive to high gas prices that eat directly away at their discretionary spending capacity, as opposed to wealthier shoppers who are relatively unaffected. A slow job market and rising interest rates are other factors cited widely as pressuring Wal-Mart's customer base.

Since it topped out on Aug. 17 at $54.97, Wal-Mart is down 3.6%. It will report comparable-sales numbers for September before the opening bell on Thursday.