Wal-Mart Warning: Beware First Quarter

Wal-Mart faces tough comparisons in the first quarter, meaning results could fall flat.
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may be losing its prowess, and investors will be looking toward the first quarter to see if the discount giant can hold on to its title.

The company, scheduled to report its results Tuesday morning, has been suffering through a rough patch. In the fourth quarter, Wal-Mart saw its traffic and sales dwindle, with total revenue declining for the first time since it went public in 1969.

The questions facing Wal-Mart amount to a recessionary double-whammy: Have those customers who remain anxious about growing unemployment returned to its aisles? And has the company been able to hold on to the affluent customers it won over amid the economic downturn?

It looks as though those one-time bargain-hunters may be turning to rival


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, which has seen strength in its apparel and home furnishing segments. Improvement in sales of discretionary items at Wal-Mart would be a good sign that the consumer is going to its stores for items beyond basics and food.

For the first quarter, Wal-Mart has forecast U.S. same-store sales coming in with 1% growth on the high end and 1% shrinkage on the low. Analysts are calling for revenue of $98.45 billion, a 4.5% increase from last year, with inflation expected to weigh on results.

But profit is expected to surge, with Wall Street analysts forecasting earnings at 85 cents a share, a 77% uptick.

Comparisons with the year-ago period were difficult in the first quarter and are expected to ease going forward.

Wal-Mart said last week that it plans on expanding its electronic business and


reported that the company may even begin selling


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iPad by the end of the year.

Reported by Jeanine Poggi in New York.

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