US: Wal-Mart Q4 profits, sales outlook hits shares
Wal-Mart to double small-store expansion programme
Wal-Mart saw its share price fall this morning (20 February) after the retail giant posted a fall in fourth-quarter earnings and lowered its fiscal 2015 sales guidance.
In the three months to the end of January, net income amounted to US$4.4bn, a drop of 21% on last year. Earnings were affected by Brazil employment claim and tax contingencies, store closures in China and Brazil, costs related to the termination of its India joint-venture, and Sam's Club restructuring costs.
Severe weather in the US also affected profits, which Wal-Mart had warned in late January would hit its fourth-quarter.
Operating income fell 3.1% to $26.9bn, due to price investments, higher expenses, investments in e-commerce and soft sales.
Net sales, however, edged up 1.4% to $128.8bn. Currency negatively impacted revenues by around $5.1bn, but acquisitions added $0.7bn.
In the US, sales were up 2.4%, while comparable-store sales declined 0.4%. International revenues grew 1.3%.
For fiscal 2015, Wal-Mart lowered its initial sales guidance. In October, the retailer forecast a 3-5% net sales increase. It now expects this to be toward the low end of the guidance.
"We expect economic factors to continue to weigh on our outlook," said CFO Charles Holley. "Some of the factors affecting our consumers include reductions in government benefits, higher taxes and tighter credit. Further, we have higher group health care costs in the US. These concerns, combined with investments in e-commerce, will make it difficult to achieve the goal we have of growing operating income at the same or faster rate than sales."
Separately, Wal-Mart said it would double its US small-store expansion programme. The group now expects to add around 270 to 300 small stores during the fiscal, doubling its initial October forecast of 120 to 150.
Wal-Mart operates 346 Neighborhood Markets and 20 Walmart Express stores.
To fund this additional growth, the retailer has revised its capital expenditures forecast for the US segment to $6.4bn to $6.9bn, up from an initial range of $5.8bn to $6.3bn.
Wal-Mart's share price was down 1.55% to $73.62 at 10:48 ET.
Over the next fortnight, we'd like to hear how you see the outlook for your business in 2014.
Now in its third year, the just-food Confidence Survey provides a snapshot of how you and your colleagues in the industry see the year unfolding. The latest survey is live and takes just a few moments to fill in.
In the coming weeks, we'll be reporting on the highlights from the survey in a free webinar live on just-food.com.
As a thank you for filling in the survey, you'll receive an executive summary detailing the results.
Wal-Mart is the largest retailer in the world. The company has retail stores worldwide, with 10,773 stores recorded across 27 countries at the end of January 2013. Despite the dominant position the co...
Wal-Mart de México is by far the leading and most influential chained grocery retailer in Mexico. Its strategy of offering low prices to attract consumers has been replicated by all other chained groc...
The tough financial situation in 2012-2013 forced Wal-Mart to be more cautious about expansion. The company plans to upgrade outlets and close underperforming stores in the forecast period. For exampl...
It is expected that Wal-Mart Brasil will continue to focus on the expansion of its stores, especially in areas such as the northeast region where disposable incomes are growing above the average in th...
- Comment: Paying the price for eating healthily
- Why Nestle is relaxed about the China "drag"
- Focus: Will Danone return to growth in dairy?
- M&A Watch: Emmi shareholders should consider sale
- Focus: Why French retail deals could hit suppliers
- Nestle organic sales fall on Asia, Europe
- Danone "eyes acquisition of Mead Johnson"
- Heinz jobs in Australasia to go in restructuring
- Symington's acquires Tanfield Foods
- Heinz silent over Polish factory expansion talk