Its US same-store sales increase also was slow last quarter, rising just 0.6 per cent. That fell short of the 1 per cent analysts had predicted.
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For the current quarter, Wal-Mart said it expected a US same-store sales increase of 0.5 percent, a slowdown from the year-earlier rise of 1.1 percent. The retailer reported $1.49 earnings per share for the quarter, beating analysts’ consensus estimates of $1.46 by $0.03.
The company said the change reflects the impact from recently announced store closures, as well as the continued strengthening of the US dollar. Wal-Mart also faces increasing competition from online leader Amazon.com, dollar stores and traditional grocers like Kroger, all of which are pushing lower prices and convenience.
Traders abandoned the stock in response, sending Wal-Mart shares down 3 percent. Dan Toporek, a company spokesman, attributed the results on sluggish performance in key foreign markets such China, the United Kingdom and Brazil. “We have improved our fulfillment capabilities with new fulfillment centers that are helping us get orders to customers’ doors faster and more efficiently”. It’s spending $2.7 billion on higher wages and other investments for its hourly workers over a two-year period.
“There are many, many retailers who have not been proactive in keeping their expenses in check”, Loeb said, adding that weakening sales growth makes it a bigger problem. Fourth-quarter revenue fell 1.5 per cent to US$129.7 billion, also hurt by currency effects. The company has expanded its online grocery shopping to more than 150 locations in at least 20 markets in the US, letting customers order online and pick up at the store without leaving their cars. The shares initially fell after the firm reported results, in part because of weak sales growth from Sam’s Club, worldwide markets, and e-commerce and in part because of fiscal 2017 sales guidance that was below expectations.
Consolidated net income attributable to the company for the fourth-quarter declined to $4.574 billion or $1.43 per share from last year’s $4.966 billion or $1.53 per share in the prior year. “In the guidance for next year, they talked about flat total sales versus the previous guidance of 3-to-4 percent”.
For the full 2015 fiscal year, profit was $4.57 per share, compared with $4.99 the year before.
Shares of Wal-Mart (NYSE: WMT) closed Wednesday at $66.11, up 21 cents. Mr. Foran expects deflationary pressure to continue through the first quarter of fiscal year 2017, he said on a later call with reporters. Still, the earnings beat may not have been top quality – Walmart spent $2.4 billion to repurchase 39 million shares in the fourth quarter.
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Globally, on a constant currency basis, e-commerce sales and GMV (gross merchandise volume) increased 8 percent.
