New York - Wal-Mart Stores’s forecast for second-quarter profit missed analysts’ estimates yesterday as the company copes with slow store traffic in the US and high operating costs overseas.
Earnings a share would be between $1.15 and $1.25 (about R11.85 to R12.88) in the three months to July, the US-based company said. Analysts had projected $1.28 on average.
Sales in the financial first quarter to April also came in lower than analysts’ estimates.
Chief executive Doug McMillon, who took the post in February, has been trying to revive Walmart’s growth in US same-store sales after lower food stamp payments and struggles to keep shelves fully stocked contributed to a decline.
The company said in February that it was increasing its capital spending by $600 million more than previously projected for the year in order to add more Neighbourhood Market and Express stores. Those smaller-format outlets have outperformed its supercentres.
“While we like the shift in focus, we’d like to see an even more aggressive approach,” Patrick McKeever, an analyst for MKM Partners, said in a note before the results were released. He has a neutral rating on the shares.
Walmart fell 2.2 percent in early New York trade yesterday. The shares were little changed this year through Wednesday, trailing a 2.2 percent gain for the Standard & Poor’s 500 index.
First-quarter net income fell 5 percent to $3.59 billion from $3.78bn a year earlier, the company said. Excluding some items, earnings a share came to $1.10. The average analyst estimate was $1.15.
Total revenue increased 0.8 percent to $115bn in the quarter. Analysts had projected $116.3bn. Sales excluding fuel at Walmart US stores open at least 12 months fell 0.2 percent. Analysts had expected the sales to be unchanged. – Bloomberg