Wal-Mart Warns of Cost Pressures

Its same-store sales growth won't translate into earnings upside.
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(WMT) - Get Report

surprising sales momentum won't result in earnings upside, the company said Thursday, as costs continue to be a problem for the world's biggest retailer.

Wal-Mart Thursday backed the consensus Wall Street earnings estimate of 65 cents a share for its second quarter, calling it "reasonable" and within its previous guidance of 63 cents to 67 cents a share. The news came as Wal-Mart confirmed its previous statement that same-store sales in June rose a better-than-expected 4.5% from a year ago.

"We are encouraged by the higher comp-store sales momentum," Wal-Mart said. "We do, however, continue to experience expense pressure in the quarter."

Among its segments, Wal-Mart said same-store sales at its flagship stores rose 4.6% in June from a year earlier, while same-store sales at Sam's Club rose 4%.

For July, Wal-Mart put comparable sales growth in the U.S. at 3% to 5%.

The stock fell $1.78, or 3.6%, to $47.60 on Instinet. Selling riddled most stocks in the premarket session Thursday following the London bomb blasts.