Wal-Mart's profit falls 21 percent; outlook weak
NEW YORK - Wal-Mart Stores Inc. (WMT) offered a weak profit outlook, signaling that it expects economic pressures to keep weighing on its low-income shoppers around the world.
The world's largest retailer also said
Thursday that its fourth-quarter profit, which covers the crucial holiday
season, dropped 21 percent. Its Wal-Mart stores recorded their fourth
consecutive quarter of declines in revenue at stores open at least a year.
The company, based in Bentonville,
Arkansas, said it would speed up growth plans for its smaller stores to cater
to shoppers looking for more convenience. It will now open 270 to 300 small
stores during the current fiscal year. That's double the initial forecast for
adding 120 to 150 stores.
"Customers' shopping habits are
changing more rapidly than ever before," said Wal-Mart CEO and President
Doug McMillon on a prerecorded call. He succeeded Mike Duke as CEO on Feb. 1.
"We must be more nimble and flexible as we operate our businesses to adapt
to these changes."
Wal-Mart, the first of a slew of major
retailers reporting fourth-quarter results, offers troubling signs for the
economy. Wal-Mart is considered an economic bellwether, with the company
accounting for nearly 10 percent of nonautomotive retail spending in the U.S.
The company offered a litany of factors
that are weighing on shoppers. They've been dealing with a 2 percentage point
increase in the Social Security payroll tax since Jan. 1, 2013. And the
discounter acknowledged that the Nov. 1 expiration of a temporary boost in
government food stamps is also hurting customers' ability to spend.
On top of that, a series of winter
storms have also chilled sales as Wal-Mart was forced to close some stores- or
shoppers just didn't want to venture out in the cold. The company said revenue
at stores open at least a year fell in the first two weeks of February, the
beginning of the first quarter, because of the severe weather. It said that at
the height of the storms, it had more than 200 stores closed.
These factors played out in the
fourth-quarter earnings results.
Wal-Mart said that it earned $4.43
billion, or $1.36 per share, in the quarter ended Jan. 31. That compares with
$5.6 billion, or $1.67 per share, a year earlier.
Excluding charges related to closing
stores in Brazil and China, Wal-Mart earned $1.60 per share.
Net revenue was up 1.4 percent to
$128.79 billion.
Analysts were expecting $1.59 per
share on revenue of $129.9 billion, according to FactSet.
Revenue at stores open at least a year
fell 0.4 percent, the fourth consecutive quarterly decline.
The company expects that earnings for
the current quarter will come in between $1.10 per share and $1.20 per share.
For the full year, it expects earnings per share to be $5.10 per share and
$5.45 per share.
Analysts expected $1.23 per share for the first quarter, and $5.56 per share for the year, according to FactSet estimates.