JP Morgan sees Wal-Mart profit a penny below view

Nov 9 (Reuters) - J.P. Morgan analysts expect the the world's largest retailer Wal-Mart Stores Inc (WMT.N) to report a quarterly profit that lags market estimates by a penny.

Sales could be weighed down by deepening consumable price deflation, weaker-than-expected discretionary spend, a modest increase in penetration of lower priced private label, and disruptions from store remodelling plans, the brokerage said.

"Positively, we believe traffic gains have been sticky..with Wal-Mart receiving return visits from higher income shoppers, partially offsetting the aforementioned headwinds," J.P. Morgan analysts led by Charles Grom wrote in a note to clients.

The analysts said a sales miss will not surprise investors given the company's downbeat tone during its annual analyst meeting last month.

The company's store remodelling initiatives are likely to be a drag on same-store sales, the analysts said.

"Our channel checks suggests the stores see a substantial hit during the actual remodeling process, which can last for up to 16 weeks," the analysts said.

However, foreign exchange impact could be a penny less than originally expected, as the U.S. dollar weakened modestly during the quarter, the analysts said.

J.P. Morgan expects the company to earn 80 cents for the third quarter, while analysts on average are looking for a profit of 81 cents, according to Thomson Reuters I/B/E/S.