Wal-Mart Stores said it was ramping up spending to compete with online retailers and other discounters after US sales took a hit during the holiday sales season.
The world's largest retailer suffered a 0.4 percent fall in US same-store sales in the quarter ending January 31, with customers hampered by severe winter weather, cuts to food stamps and increased payroll taxes.
Results were also marred by write-offs in Wal-Mart's international operations, including charges to cover tax assessments and labour claims in Brazil, the closure of under performing stores in Brazil and China and the termination of a joint venture in India.
That turned into a 21 percent fall in net profits for the quarter, and the company gave a disappointing forecast for the current period as well.
The US results were a disappointment after Wal-Mart executives vowed aggressive promotions to fend off competitors heading into the crucial holiday November-December shopping season.
Although the company characterised store traffic ahead of the "Black Friday" kick-off as brisk, the results suggested it was unable to sustain the momentum. Traffic at US stores fell 1.7 percent during the quarter from last year.
Quarterly earnings fell to USD 4.4 billion from USD 5.6 billion a year ago. Earnings per share fell to USD 1.37 from USD 1.68.
Globally revenues were up 1.5 percent to USD 129.7 billion, but fell shy of analyst expectations.
Stripped of the restructuring and tax charges from Brazil, China and India, and some US operations costs, Wal-Mart said underlying earnings per share were USD 1.60, a penny above analyst expectations.
Bill Simon, head of Walmart US, said he was disappointed with overall sales in the quarter, but "particularly proud" of some aspects of performance. US stores scored positive comparable sales during the six-week period ending December 27, he said.
But Morningstar analyst Ken Perkins said holiday-sales profits were likely pinched by aggressive discounting.
