Wal-Mart Storeswmtreported a flat first-quarter profit Thursday as revenue from its huge international operations was hurt by the stronger dollar.
The world's largest retailer earned $3.02 billion, or 77 cents a share, for the period ended April 30. That was little changed from a year earlier. Revenue fell 0.6% to $93.47 billion, from $94.04 billion in 2008.
The results met the expectations of analysts surveyed by Thomson Reuters, who projected 77 cents a share on revenue of $96.37 billion.
Wal-Mart said earnings were reduced 4 cents per share because of currency exchange rates.
The stronger dollar has been hurting many companies that have large overseas businesses. Most U.S. companies that sell goods internationally convert sales from other currencies into dollars when they report financial results. If the dollar strengthens relative to foreign currencies, the international revenue is converted into fewer dollars.
Without the currency impact, Wal-Mart said sales would have risen 4.5% to $98.31 billion. Accenting the company's exposure to currency fluctuations, nearly a quarter of Wal-Mart's sales for the first quarter — 22.7% — came from its international division.
Despite the flat results, Wal-Mart has been one of the few bright spots in retailing, performing better than competitors Target and Costco as it has found the right mix of merchandise and marketing to enhance its renewed focus on price. Kohl's announced Thursday that its first-quarter profits fell 11% as same-store sales dropped.
Wal-Mart is also benefiting as shoppers concentrate on necessities such as groceries. As part of its effort to draw cost-conscious shoppers, the company relaunched its Great Value line of store-label groceries in March.
In his analysis, William Blair & Co. analyst Mark Miller said Wal-Mart is picking up market share as shoppers continue to try to stretch their dollars.
Last week, Wal-Mart reported that same-store sales rose 5% in April, surpassing the 2.9% gain expected by Wall Street. The figure excludes fuel sales. In comparison, Target had a slim 0.3% gain. Same-store sales are sales at stores open at least a year and are considered a key indicator of a retailer's health.
Yet Wal-Mart, like many discounters, faces a challenging second quarter compared with the same period a year ago. Last year, people were receiving government stimulus checks. While shoppers used a big chunk of the money to pay down debt, they used the rest to buy necessities.