Tuesday's good news for Wal-Mart ( WMT) was bad news for the rest of the retail sector.

The world's largest retailer met fourth-quarter earnings expectations and forecast a solid fiscal 2003. But the Bentonville, Ark., discounter also disappointed investors by saying the economy remains stagnant, a fact that increasingly appears likely to hurt other retailers' results more than Wal-Mart itself. Wal-Mart slid 43 cents to $59.60, while the S&P retail index slipped 0.4%.

Wal-Mart said that earnings for the fourth quarter ended Jan. 31 rose to $2.19 billion, or 49 cents a share, from $2 billion, or 45 cents a share, in the year-ago period. The latest period's numbers matched the consensus analyst estimate, according to Thomson Financial/First Call. Sales climbed to $64.21 billion from $56.56 billion. Sales at the company's Wal-Mart stores rose 15.3%, while Sam's Club sales increased 10.9%. Total company same-store sales rose 6.9% for the quarter.

Most of the news from the release was distinctly positive for Wal-Mart. For instance, though the company didn't meet its goal of increasing earnings at the same rate of sales, it did see significant improvements in the latter part of the year. The fourth quarter's 8.9% jump in earnings per share was more than triple the rate of growth in the first half of the year.

Wal-Mart also continued to grab market share from competitors during the fourth quarter. But that fact doesn't "necessarily signal a rebound in consumer spending," the company said in a prerecorded conference call. That sentiment was clearly weighing on investors, despite the generally stronger-than-expected numbers that most retailers posted in the first week of February. Indeed, aside from discounters such as Wal-Mart and chic rival Target, many department store and specialty retailers have seen their sales and earnings weaken in recent quarters as cash-strapped consumers bought sparingly and then mostly at clearance sales.

Meanwhile, Wal-Mart gave financial guidance for the coming first quarter and full year that could potentially top Wall Street's expectations. It expects earnings of 35 cents to 36 cents a share in the first quarter, compared with expectations of 35 cents a share. For the full year it expects earnings of $1.74 to $1.76 per share, compared with a consensus estimate of $1.74.

In the conference call, the company said these estimates do not assume any rebound in the economy. "This assumes the economy remains at the current level," the company said.

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