Aug 18, 2015
Wal-Mart cuts outlook
Aug 18, 2015
Wal-Mart Stores Inc reported weaker-than-expected quarterly earnings and lowered its full-year forecast, citing higher costs from adding worker hours as well as weaker margins in its U.S. pharmacy business.
Shares of the world's largest retailer fell 2.2 percent to $70.30 in heavy premarket trading on Tuesday, putting it on track to open at a 2-1/2-year low.
Net profit attributable to the company fell to $1.08 per share in the second quarter ended July 31 from $1.21 per share a year earlier. Analysts, on average, expected $1.12 per share, according to Thomson Reuters I/B/E/S.
For the year ending in January, Wal-Mart lowered its earnings-per-share forecast to a range of $4.40 to $4.70 from its outlook of $4.70 to $5.05 in February. The market consensus was for $4.77 per share.
Its profits have been weighed down by a decision announced in February to invest $1 billion to lift workers' pay, as well as spending to boost its e-commerce infrastructure as it seeks to close the gap online with Amazon.com Inc.
Wal-Mart said on Tuesday it decided to increase worker hours beyond the February plan as it tries to improve customer service with faster check-out lines and better stocked shelves, which is also denting earnings.
It also said that reduced reimbursement rates from pharmacy benefit managers were hurting margins in its U.S. pharmacy business and cited an increase in "shrink," an industry term for losses due to theft in the store.
In one bright spot, the company said sales at stores open more than a year in the United States increased 1.5 percent in the 13 weeks ended July 31 from a year earlier, helped by lower gasoline prices. Analysts polled by research firm Consensus Metrix expected a 1.0 percent rise.
Revenue totaled $120.2 billion in the quarter, little changed from a year earlier.
The retailer lowered its forecast for opening smaller-format stores, nixing plans for some unpromising locations. It now plans to open 160 to 170 Neighborhood Markets stores in the full year to January, down from a previous plan for 180 to 200. It said it was still on track to open 60 to 70 Supercenters this year.
© Thomson Reuters 2021 All rights reserved.