Wal-Mart Stumbles Again

It misses sales targets, but shares rise 3% in early action.
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Updated from 6:56 a.m.

Wal-Mart's

(WMT) - Get Report

struggles continued Tuesday as the world's biggest retailer posted third-quarter sales that fell shy of Wall Street's expectations.

But shares rose 3% in early trading as investors crossed their fingers and hoped the worst is over.

The Bentonville, Ark., company made $2.59 billion, or 62 cents a share, from continuing operations for the quarter ended Oct. 31, up from the year-ago $2.42 billion, or 58 cents a share. The latest quarter included a penny a share in gains tied to property insurance.

Sales rose 12% from a year ago to $83.54 billion, as sales rose 7.8% at U.S. Wal-Mart stores, 1.9% at Sam's Club stores and 34% internationally.

Analysts surveyed by Thomson Financial were looking for a 60-cent profit on sales of $84.48 billion.

"We are pleased that Wal-Mart again had record sales and earnings for the third quarter," said CEO Lee Scott. "In addition, we are pleased that we've seen improvements in gross margin in all three segments of our business.

"Although sales in the U.S. were softer than we hoped for in the third quarter, there are real opportunities in the fourth quarter to build on the momentum of the aggressive pricing strategy we have implemented in our stores for the holiday season," Scott added. "This season, no one will doubt Wal- Mart's leadership on price and value."

Total U.S. comparable store sales for the quarter increased 1.5%, reflecting a 1.5% increase for Wal-Mart Stores and a 1.8% increase for Sam's Club. Comparable store sales that are presented in this release exclude the impact of fuel sales in the Sam's Club segment. Including the impact of fuel sales, the Sam's Club and total U.S. comparable store-sales figures for the quarter would have been flat and 1.2%, respectively.

Wal-Mart has sputtered in recent months, posting October sales gains that were less than what Wall Street expected and guiding to a flat November performance in stores open at least a year. The company's stumbles have come as other retailers such as

Target

(TGT) - Get Report

,

Kohl's

(KSS) - Get Report

and

J.C. Penney

(JCP) - Get Report

have rallied on the back of stronger-than-expected consumer spending, even with a long-anticipated slowdown in housing markets.

Wal-Mart guided to fourth-quarter earnings of 88 to 92 cents a share, compared with the 92-cent Thomson target. It said it expects a 1%-2% rise in fourth-quarter same-store sales,

Reuters

reported.

Shares rose $1.33 to $47.65.