Wal-Mart Stores Inc.’s (NYSE:WMT) profits for the fourth quarter reflected the impact of the price cutting moves made by the retailer during the holiday season.

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Wal-Mart has been trying to bring back budget-conscious shoppers who migrated to other avenues such as dollar stores in the context of a difficult economic situation by lowering prices. Though these moves were successful, with traffic increasing after six straight quarters of declines, the fall in margins led to the company’s results failing to meet analysts’ projections on counts of both sales and profit.

“The market wanted Wal-Mart to begin to transition to a land of stronger profits per sales in the fourth quarter and then project that trend becoming more self-sustaining” this year, said Brian Sozzi, chief equities analyst at NBG Productions. “On both scores, there was disappointment to be found.”

Earnings for the quarter were $5.19 billion ($1.51 a share) compared to $5.02 billion ($1.41 a share) in the previous year. Excluding items, earnings were $1.44 a share, missing Street expectations of $1.45 a share. Sales rose to $122.29 billion, up 5.8 percent, but short of the $124.21 billion expected by analysts. Same store sales were higher across all shopping categories in the U.S. except apparel, which was adversely affected due to a milder winter.

International operations did better than the U.S. At $2.31 billion, operating profits were higher by 15.2 percent at Wal-Mart International. Operating profits in the U.S. grew by only 1.4 percent to $6.11 billion.

The company forecasts first quarter earnings per share of $1.01 to $1.06 against analysts’ expectations of $1.05 a share. Full year earnings are expected to be from $4.72 to $4.92 per share.

Here’s how Wal-Mart shares are reacting to the news:

Wal-Mart Stores Inc. (NYSE:WMT): WMT shares recently traded at $60.17, down $2.31, or 3.7%. They have traded in a 52-week range of $48.31 to $62.63. Volume today was 8,635,264 shares versus a 3-month average volume of 8,353,460 shares. The company’s trailing P/E is 12.68, while trailing earnings are $4.72 per share.

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To contact the reporter on this story: Alex Capel at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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