Saturday 22 November 2014

Wal-Mart cuts earnings forecast on flat US sales data

Renee Dudley

Published 15/08/2014 | 02:30

A Wal-Mart Stores Inc company distribution centre in Bentonville, Arkansas
A Wal-Mart Stores Inc company distribution centre in Bentonville, Arkansas

THE world's biggest retailer Wal-Mart has reported stagnant same-store sales and cut its earnings forecast for the year, hurt by higher health-care costs and slow traffic at its supercenters.

Total revenue at Wal-Mart's U.S. stores rose 2.7pc to $70.6bn (€52.8bn) while international sales climbed 3.1pc to

$33.9bn.

Earnings for the year will now be $4.90 to $5.15 a share, down from a previous forecast range of as much as $5.45, the company said today in a statement.

Sales at US Wal-Mart and Sam's Club outlerts were little changed in the three months to the start of August.

Chief executive officer Doug McMillon, who took the post in February, is trying to revive US growth in the face of a slow economic recovery. The retailer hasn't been able to generate a lift in same-store sales gain for th epast 18 months, and customers are making fewer trips to big-box retailers.

Cuts in government assistance also are leaving low-income shoppers with less money to spend.

"They continue to struggle driving traffic to stores," said Brian Yarbrough, an analyst at Edward Jones.

"It's difficult out there. At some point, we've got to see better same-store sales."

Wal-Mart shares fell 0.3pc to $73.78 on the news. The stock is down 5.9pc so far this year, under performing a rising market.

Wal-Mart blamed higher US health- care costs and increased investment in e-commerce, where it aims to challenge Amazon.com's dominance.

With 2.2 million employees world wide the company sees health-care expenses growing by more than $500m.

"E-commerce is key," Yarbrough said. "It's the right place to be investing in."

In an effort to compete with rivals Wal-Mart has increased staffing at stores' front ends, in delis, bakeries and overnight stocking.

Irish Independent

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