FLAT SALES FORECAST
Wal-Mart shares take serious dip
NEW YORK Wal-Mart expects its profit to take a hit as the world’s biggest retailer works to fend off intensifying competition by perking up customer service and adapting to changing shopping habits.
The company that is known for its low prices and sprawling supercentres also forecast sales for its full fiscal year to be flat, hurt by unfavourable currency exchange rates. Wal-Mart had previously forecast sales growth of one to two per cent. For its next fiscal year, it said profit could fall by as much as 12 per cent.
Its shares tumbled nearly nine per cent to US$60.83, which put them on track for their steepest one-day fall in more than 15 years.
The disappointing guidance comes as Wal-Mart Stores Inc. works to fix its U.S. business amid pressure from rivals including traditional grocers, dollar stores and Amazon.com. At its annual meeting in New York City Wednesday, CEO Doug McMillon sought to reassure investors that the company transforming to keep up with a rapidly changing retail landscape.
“We all know that retail has changed and will continue to change at an accelerating pace,” said McMillon, who took the job in February 2014.
Under McMillon, Wal-Mart has accelerated the openings of smaller stores, which tend to be more conveniently located and let customers get in and out faster. The company is also stepping up its e-commerce efforts. On Wednesday, it said it was expanding its online grocery with free pickup to 10 additional markets, making the service available in a total of 20 markets in the U.S.
Such moves, along with a push to improve the cleanliness of its U.S. stores, are expected to help attract more higher-income customers than in the past, McMillon said.
For its fiscal 2017, Wal-Mart expects earnings per share to be down six to 12 per cent. The company attributed a big portion of the decline to its investment in raising wages and providing more training for workers, which Wal-Mart is hoping will lead to improved service.