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Wal-Mart reports first-ever dip in sales, despite profit jump

A shopper makes her way to her car at Walmart in Brunswick, Maine, on Thursday. Wal-Mart Stores Inc., one of the recession’s biggest beneficiaries, felt the pinch during the fourth quarter as sales fell at U.S. Walmart stores for the first time. (Associated Press)
Anne D’Innocenzio Associated Press
A shopper makes her way to her car at Walmart in Brunswick, Maine, on Thursday. Wal-Mart Stores Inc., one of the recession’s biggest beneficiaries, felt the pinch during the fourth quarter as sales fell at U.S. Walmart stores for the first time. (Associated Press)

NEW YORK – After nearly 50 years of hammering competitors with discounts, Wal-Mart Stores Inc. is getting a taste of its own medicine.

The world’s largest retailer has seen sales at its U.S. Walmart stores fall for the first time, as price-cutting competitors lure away bargain-hunters. Department stores and dollar stores are muscling in on the company’s discount turf.

And executives do not expect much improvement, forecasting sales at stores open at least a year will range from down 1 percent to up 1 percent.

“They’re being squeezed from the top … and from the bottom,” said Michael Hicks, associate professor of economics at Ball State University, who wrote a book about Wal-Mart’s economic impact.

Overall, Wal-Mart’s overseas growth and a concerted cost-cutting campaign pushed profit up 22 percent in the fourth quarter. Wal-Mart earned $4.63 billion, or $1.21 per share, up from $3.8 billion, or 96 cents per share, in the same quarter last year.

The 0.5 percent sales decline reported Thursday covered the three months ending Jan. 31 at the company’s namesake stores. It was the first year-over-year quarterly decline since Wal-Mart Stores Inc. went public in 1969. And it was a remarkable stumble for an institution revered and reviled for its relentless expansion and economic power.

Department stores such as Macy’s and Kohl’s came into the holiday season ready to compete on price and saw sales rise as a result in December and January.

On the other end, discounters like Family Dollar Stores have added more groceries. And even Sears Holdings Corp.’s long-suffering Kmart has seen a rebound in sales. Target Corp., which has been increasing its food offerings and focusing on low prices in its advertising, is slated to report fourth-quarter results Tuesday.

Wal-Mart’s own parade of holiday discounts had less effect, as the chain drew fewer shoppers who spent less per trip.

Wal-Mart officials said that deflation in such areas as electronics and groceries was the biggest factor in dampening sales, but the company’s chief financial officer, Tom Schoewe, acknowledged “tough” competition this past holiday season from rivals.

The company also cited a massive store renovation program as keeping some customers away.