Shares slipped 47 cents to $71.91 in pre-market trading. Earnings were however within management’s guidance range of $1.06 to $1.18 per share. The recent devaluation of China’s currency was viewed as a sign of Beijing’s anxiety about the economic slowdown.
Advertisement
The significant cut to the forecast, even as Wal-Mart logged a 1.5 percent increase in comparable sales at U.S. stores open at least a year, highlighted a growing problem with controlling costs, said Edward Jones analyst Brian Yarbrough.
Wal-Mart Stores posted $120.2bn in total revenues for the quarter.
Britain’s FTSE 100 fell 0.3 percent.
Operating income declined 10% to $6.07 billion in the second quarter.
Wal-Mart isn’t alone in facing some pain as it aims to deliver cleaner stores and faster and friendlier service to increasingly demanding shoppers who are shifting their spending to dollar stores or online.
Esperion Therapeutics jumped 12.5 percent to $85 after the drug developer said its cholesterol-lowering drug’s development was on track. The retailer reported $1.08 EPS for the quarter, missing the consensus estimate of $1.12 by $0.04.
“All the news out of China recently has done nothing to restore confidence in its financial markets and the ripple effect can be felt in Europe”, said David Madden, market analyst at IG.
MSCI’s all-country world stock index lost 0.25 percent. The euro was 0.1 percent lower at $1.1061 and the dollar 0.2 percent down at 124.25 yen.
In an environment Chief Executive Andy Clarke described as “the worst storm in retail history”, like-for-like sales declined 4.7 percent in the second quarter. Excluding fuel impact, sales increased 2.8%.
The Shanghai Composite Index fell 6.2 percent to 3,748.16, its largest drop since the index’s… At Sam’s Clubs, that measure rose 1.3 percent. Japan’s Nikkei dipped 0.3%. Sales at retailers advanced 0.6 percent in July, and the prior two months were revised higher, according to the Commerce Department. It has been refurbishing many of its superstores in response. The company now expects earnings of between $4.40 and $4.70 per share.
In the third quarter of fiscal 2016, investments in the new wage structure and training are likely to reduce earnings by 8 cents per share.
The company also cited that reduced reimbursement rates from pharmacy benefit managers are also hurting profit margins.
The 24-cent dent in earnings adds up to about $773 million in total, based on Wal-Mart’s roughly 3.2 billion shares outstanding. He said the company continues to progress in improving both e-commerce and mobile capabilities, as it continues to invest in Pangaea, its global technology platform and in the opening of four new fulfillment centers in the United States.
Advertisement
Target also increased its estimated range for full year adjusted earnings.
