Wal-Mart's 4Q earnings down from year ago

Wal-Mart Stores Inc.'s business offers valuable insight into how Americans are reacting in the slow economic recovery: They will spend, but only if they believe they're getting the lowest prices.

The world's largest retailer guaranteed holiday shoppers that they'd get the lowest prices on merchandise. As a result, bargain-hungry shoppers flocked to Wal-Mart in the fourth quarter, helping it to record its first increase in store traffic in at least two years. But the company's margins suffered and its earnings declined 15 percent from a year ago.

While Wal-Mart's earnings were down, Macy's and Home Depot were among retailers reporting fourth quarter gains Tuesday.

Wal-Mart's core customers "remain cautious about their finances," Mike Duke, the company's president and chief executive, said in a statement.

The new consumer behavior is likely to have an impact on companies of all shapes and sizes as they struggle with how to lure shoppers in with low prices without cutting them so much that it erodes profits. Wal-Mart, which draws nearly 10 percent of all nonautomotive spending in the U.S., highlights the compromise companies have to make when they focus on rock-bottom pricing in the still-weak economy.

Overall, Wal-Mart's U.S. business had a 2.1 percent increase in revenue at stores opened at least a year, including a 5.4 percent rise at Sam's Clubs.

But the discounter, based in Bentonville, Ark., said net income was $5.16 billion, or $1.50 per share in the three months ended Jan. 31. That compares with $6.05 billion, or $1.70 per share, in the year ago period.

At Macy's Inc., a strong holiday shopping season and hearty online sales pushed fourth quarter net income up 12 percent. Macy's, which runs upscale Bloomingdale's as well as Macy's stores, has been outperforming mid-price peers such as Kohl's Inc. and J.C. Penney Co., which will report their quarterly results Thursday and Friday, respectively.

Home Depot Inc. said its fiscal fourth-quarter net income rose 32 percent as homeowners spent more on renovation projects in part due to the mild weather in the United States.

At Barnes & Noble, fiscal third-quarter net income fell 14 percent, as rising costs offset higher sales. And the company announced a new attempt to lure shoppers with low prices, saying it will introduce a cheaper Nook tablet, with 8 gigabytes of memory for $199, to compete with Amazon.com's Kindle Fire, which also has 8GB and sells for $199.