The world’s largest retailer plans to grow sales by $45 billion to $60 billion in the next three years and spend $20 billion buying back its own shares. Wal-Mart expects sales growth of 3 to 4 per cent annually over the next three years.
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JPMorgan shares fell 2.5 percent to $59.99 after the bank reported disappointing third-quarter results late on Tuesday. They added that they think Wal-Mart’s weakness is more company-specific as it has been increasing spending on e-commerce and its digital platforms.
The American chain has taken initiatives to attract customers by enhancing the shopping journey, expanding its online grocery pickup service, and launching addition small-format stores called Neighborhood Markets.
McMillon acknowledged the high costs of Wal-Mart’s investments, but said they had helped the retailer turn around customers’ perceptions of its stores. He also said that the company was going to be focused on shoppers that are driven by lower prices as well.
Wal-Mart Stores is facing stronger headwinds than investors thought.
Greg Foran, who became CEO of the U.S. division of Walmart in 2014 also said that that company was committed to delivering low prices and running a tight ship. Foran is spearheading a major overhaul of its US business, which account for 60 percent of its total business. It has put a greater emphasis on improving the look of its stores, trying to make them more desirable places to shop. Walmart CFO Charles Holley said the company’s earnings per share, which are projected to decline this year compared to last year, will fall another 6% to 12% next year as investments in the business peak.
Wal-Mart has been grappling with sluggish sales, leading investors to seek significant changes. The company raised its minimum wage to $9 per hour in April. In February, 2016, employee wages will rise to at least $10 an hour.
While Wall Street responded as though Walmart had taken a catastrophic hit – analysts were expecting a four percent gain in profits – the company’s message remained upbeat, according to Bloomberg.
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Earlier this month, Mr. McMillon unveiled plans to cut 450 jobs at the company’s Arkansas headquarters. For its fiscal 2017, it said it expects earnings per share to be down 6% to 12%. Due to this, the corporation will bear an additional cost of $1.2 billion this year and another $1.5 billion next year.
