Thu Nov 17, 2011 3:06pm EST * Q3 EPS 97 cents misses Wall St view of 98 cents* U.S. same-store sales up 1.3 pct* Mobile apps, social networking, online push are costly* Shares off 2.7 percentBy Jessica WohlNov 15 (Reuters) - Wal-Mart Stores Inc's decisionto absorb most of the rising food costs for its stressed U.S.shoppers and spend on its e-commerce business weighed onprofitability, even as key U.S. sales rose for the first timein more than two years.Sales at U.S. discount stores open at least a year rosemore than expected in the third quarter ended on Oct. 31,ending a string of nine straight quarterly declines. Same-storesales have now risen for four months in a row.But visits to stores were once again down from a yearearlier, even as shoppers, on average, spent more per visit.The results coincided with government reports that U.S.retail sales rose 0.5 percent in October, while wholesaleprices fell 0.3 percent.Walmart U.S., the largest division of the world's largestretailer, held off on raising prices as much as it could toappeal to cost-conscious shoppers who remain concerned aboutthe job market and overall economy."They were clearly being aggressive in pricing and gainingshare, but they didn't get the leverage on the cost side," saidITG Investment Research analyst John Tomlinson. He said thecompany might look for more price "givebacks" from vendors.Groceries cost Walmart U.S. about 4 percent more during thequarter. But Walmart saw inflation of only 0.7 percent acrossthe entire store due to deflation in areas such as televisions, price cuts and customers trading down to lessexpensive options, said U.S. Chief Executive Bill Simon.Shares of Wal-Mart were off 2.7 percent at $57.29 in latemorning trading on Tuesday.The shares had been rising heading into the quarterlyreport, after Wal-Mart said in mid-October that U.S. same-storesales had continued to rise early in the period.Same-store sales account for about 98 percent of Wal-Mart'ssales in the United States, so ending the slump at existingstores is critical for the company, as its internationalbusiness has not grown as rapidly as some anticipated.Walmart's customers remain worried about the U.S. jobmarket, CEO Mike Duke said on a recorded call. The company'ssurvey of mothers found that only one out of 10 viewed theeconomy as "good," he said.Walmart has been ratcheting up efforts to reach shoppersthrough the Web and mobile apps, but those measures are comingat a cost. Unallocated corporate overhead and other expensesjumped about 40.7 percent to $536 million, due largely toinvestment in e-commerce, Treasurer Jeff Davis said on thecall.U.S. TURNAROUNDWalmart U.S. same-store sales rose 1.3 percent. That toppedthe company's forecast, which called for such sales to be down1 percent to up 1 percent. It also exceeded the analysts'average forecast for a rise of 0.3 percent, according toThomson Reuters data.Walmart is offering holiday season layaway for the firsttime in years and advertising its low prices more than usual asit tries to win back shoppers who have flocked to competitorsincluding Dollar General Corp .The most popular toy on layaway so far has been LeapFrogEnterprises Inc's LeapPad, Simon said. The gadget, whichis like a tablet computer for kids, is priced at about $99.Retailers account for a layaway sale when the customer paysfor the item in full and picks it up, so most layaway purchasesat Walmart will not count as sales until the fourth quarter.Walmart, which has been open on Thanksgiving for years,will start its big sales at 10 p.m. that night. It has alsolowered some prices weeks before Black Friday, the day afterThanksgiving and the traditional kick-off to the holidayshopping season.Wal-Mart earned $3.34 billion, or 97 cents per share, fromcontinuing operations in the third quarter, compared with $3.44billion or 95 cents per share a year earlier, when a taxbenefit lifted profit by 5 cents per share. There were fewershares outstanding during the most recent quarter.The company had forecast a profit of 95 cents to $1.00 pershare. Analysts on average expected 98 cents, according toThomson Reuters I/B/E/S.Net sales rose 8.2 percent to $109.5 billion.Meanwhile, Home Depot Inc raised its profit outlook, TJX Companies Inc increased itsholiday same-store sales forecast, Staples Inc cut its profit viewprofit at SaksInc topped expectations.Wal-Mart forecast fourth-quarter earnings of $1.42 to $1.48per share from continuing operations. Analysts on averageforecast $1.45.It expects Walmart U.S. same-store sales to be flat to up 2percent after falling 1.8 percent in last year's fourthquarter. At Sam's Club, same-store sales excluding fuel shouldrise 4 to 6 percent after a 2.7 percent rise last year.