Wal-Mart forecasts tepid sales growth; stock slides

Thu Feb 18, 2016 1:09pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Nathan Layne

(Reuters) - Wal-Mart Stores Inc on Thursday reported a lower quarterly profit and gave a lackluster sales outlook as declining prices for grocery products and sluggish apparel demand took a toll, and its shares fell more than 3 percent.

Earnings at the world's largest retailer have been under pressure recently due to costs to raise entry-level wages, spruce up its stores and build out its e-commerce infrastructure as it grapples with faster-growing online rival Amazon.com Inc.

Results for the fourth quarter ended on Jan. 31 show Wal-Mart is struggling to make those investments bring significant top-line growth, but it also suffers from a stronger dollar that has been slicing into the value of revenue generated overseas.

The company said sales at U.S. stores open at least a year rose 0.6 percent from a year earlier. This was their sixth straight quarterly gain, but it missed market expectations for a rise of 1 percent.

For the current quarter, Wal-Mart said it expected a U.S. same-store sales increase of 0.5 percent, slower than the year-earlier rise of 1.1 percent.

The retailer also said it expected net sales to be flat in its new fiscal year, down from a previous forecast for 3 percent to 4 percent growth.

The tepid sales forecast is troubling because it comes despite the investments in wages and renovations, Edward Jones analyst Brian Yarbrough said. He said some rival supermarket chains have been outperforming Wal-Mart in the grocery market.

"It's the same old story," Yarbrough said. "They continue to struggle to drive traffic and sales."   Continued...

The Wal-Mart company logo is seen outside a Wal-Mart Stores Inc company distribution center in Bentonville, Arkansas June 6, 2013.  REUTERS/Rick Wilking