Wal-Mart (NYSE: WMT ) shares were on an upward trajectory today after it reported second-quarter results, but many investors appear to be ignoring the fact that one of the discount giant's major recurring problems -- flagging U.S. same-store sales -- still isn't showing signs of improvement.
Second-quarter income from continuing operations increased 5.7%, to $3.8 billion, or $1.09 per share. Total sales increased 5.5%, to $108.6 billion, including a currency exchange-rate benefit of $2.3 billion.
Total U.S. same-store sales were flat; Wal-Mart's warehouse discounter, Sam's Club, showed strength with its 5% increase in comps. However, Wal-Mart's U.S. comps decreased by 0.9%, marking the ninth consecutive quarterly decrease in the metric. As was the case last quarter, this part of Wal-Mart's engine is still stalled out.
In another parallel to last quarter's tidings, Wal-Mart's international sales provided a bright spot, increasing 16.2%, to $30.1 billion.
Another recurring theme is Wal-Mart's cautionary tidings about lower-income American consumers. The pressures these consumers face, given high levels of unemployment, have proved to be a drag on Wal-Mart's U.S. sales as customers lighten their shopping carts. They've probably also driven the most budget-conscious shoppers through the doors of even cheaper retail rivals, such as Dollar General (NYSE: DG ) and Family Dollar (NYSE: FDO ) .
Wal-Mart still needs to try to find customers from somewhere to boost its U.S. sales; that's easier said than done, since higher-income consumers are probably still more strongly drawn to discounters such as Target (NYSE: TGT ) and Costco (Nasdaq: COST ) .
It's not all bad news at Wal-Mart, but the news isn't that good until it gets U.S. sales on a stronger footing again. As much as the international sales growth is heartening, investors should avoid the shares until Wal-Mart shows more signs of strength on its home turf.