In other trading, Wal-Mart fell 3 percent after warning that its annual profit will likely fall short of previous estimates, partly because of a strong dollar.
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The retail corporation reported a growth of 1.5% in the same store sales, which exceeded its guidance of 1% growth.
It lowered its per share earnings forecast for the year to US$4.40-US$4.70 from up to US$4.70-5.05 previously after missing Wall Street forecasts for the second quarter. A total of around 5.4 billion shares were traded on Friday, lower than the month-to-date average of 6.7 billion. Jefferies Group restated a hold rating and set a $77.00 target price on shares of Wal-Mart Stores in a research note on Wednesday, May 20th.
“We’re pleased that the investments we’ve made are helping to improve our business”.
Urban Outfitters, a youth-oriented apparel retailer, fell 2.3 percent as second-quarter net income slipped about one percent to $66.8 million.
Because of the minimum wage raise, Wal-Mart was able to register a 1.5% increase in comparable store sales in the latest quarter. Morningstar Premium Members gain exclusive access to our full Wal-Mart Report, including fair value estimates, consider buying/selling prices, bull and bear breakdowns, and risk analyses.
Improvements in the U.S. provided executives and analysts reason to be optimistic.
The price of oil inched above its recent six-year low, though analysts expect the supply glut that has pushed prices lower to persist.
“Sales trends are moving in the right direction and those sales are mostly driven by traffic increases”.
“Bottom line, the nice uptick in single family starts certainly follows the better home builder sentiment we saw from the NAHB as a dearth of inventories is hopefully going to now be met by improved supply”.
“You’re in the midst of a pretty transformational strategy overhaul”.
“But it will take time to see results, so this will impact us… for the rest of the year”, he said.
Though the company’s plans to provide a pay hike and invest more in e-commerce initiatives would help to regain investors’ confidence in the company, it will reduce earnings in the near term.
On an earnings call, Chief Financial Officer Charles Holley said the pharmacy margins were falling due to lower reimbursement on “some of the main drugs”, without offering further details. Shoppers are happier with the in-store experience, according to internal polls that are focused on whether customers view the store as “clean, fast and friendly”.
An analyst at Edward Jones, Brian Yarbrough said that the considerable decrease in the guidance underlined a growing issue with controlling expenses. Factors related to pharmacy and merchandise are concerning, however.
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Several other analysts also recently weighed in on the company.
