Wal-Mart revamp bears fruit
WAL-MART topped thirdquarter profit estimates and increased the low end of its annual forecast, a sign the retailer is making progress reining in costs and revamping its stores.
Earnings per share were 99c (R14.23) in the period, excluding some items, the Arkansas-based company said yesterday. Analysts had predicted 98c on average, according to Bloomberg data. Wal-Mart now expects profit of $4.50 to $4.65 a share this year, up from a previous forecast of at least $4.40.
The outlook brought
a dose of good news to investors after a dour profit forecast crushed the shares last month. Wal-Mart suffered its worst stock decline in more than 27 years on October 14 when it said earnings would decrease 6 percent to 12 percent next year. The strong dollar also hurt the value of WalMart’s overseas sales, contributing to a 1.3 percent revenue decline last quarter.
The shares rose 3.2 percent to $59.70 at 7.03am in early trading yesterday, in New York. Wal-Mart had lost 33 percent of its value this year at Monday’s close.
Wal-Mart is fixing up its US stores after years of customer complaints about out-of-stock items, poor service and long checkout queues. In an effort to improve operations, Wal-Mart announced plans in February to raise 500 000 workers’ wages. The idea is that higher pay will help the company recruit and retain better employees. The retailer upped its starting level to $9 an hour earlier this year and plans to make it $10 in 2016.
The store-improvement plan is beginning to bear fruit. In February, 16 percent of its 4 600 US locations were at the standards Wal-Mart had set for service, cleanliness and convenience. In October, that number was 67 percent. – Bloomberg