UPDATE: Wal-Mart Posts In-Line Q2 Earnings, Lowers Full-Year Forecast

Shares of Wal-Mart Stores

tumbled more than 1% in pre-market trading after the company lowered its full-year earnings forecast. The Bentonville, Arkansas-based company posted quarterly profit from continuing operations of $3.92 billion, or $1.21 per share, compared to $4.06 billion, or $1.23 per share, in the year-ago quarter. Its sales rose 2.8% to $119.34 billion. However, analysts were expecting earnings of $1.21 per share on revenue of $118.98 billion. Walmart's international net sales surged 3.1% to $33.9 billion. Walmart's US same-store sales came in flat for the 13-week period, while US net sales climbed 2.7% to more than $70 billion. Walmart's US comp traffic fell 1.1% during the 13-week period, while average ticket rose 1.1%. Sam's Club comp traffic, excluding fuel, rose 0.3%, while average ticket dropped 0.3%. Free cash flow increased to $6.8 billion for the six months ended July 31, 2014, up from $5.2 billion in the earlier year. Walmart now expects full-year earnings from continuing operations of $4.90 to $5.15 per share, versus its earlier forecast of $5.10 to $5.45 per share. It projects Q3 earnings of $1.10 to $1.20 per share. The company lowered its earnings guidance citing incremental investments in e-commerce and higher US health-care costs than earlier anticipated. “I'm pleased with our solid earnings per share performance,” said Doug McMillon, Wal-Mart Stores, Inc. president and CEO. “As it relates to the positives from the quarter, I'm encouraged by the performance of our International business, our Neighborhood Market sales in the U.S. and by our e-commerce growth. As it relates to our challenges in the quarter, we wanted to see stronger comps in Walmart U.S. and Sam's Club, but both reported flat comp sales. Stronger sales in the U.S. businesses would've also helped our profit performance.” Walmart shares declined 1.39% to $73.00 in pre-market trading.