Thursday, August 21st23.3°C
22938
21477

Poor weather dents Wal-Mart 1Q results; 2Q earnings forecast misses analysts' expectations

NEW YORK, N.Y. - Wal-Mart's first-quarter net income fell 5 per cent as bad winter weather and financial struggles kept customers from spending at the world's largest retailer.

The company's shares fell nearly 2 per cent as Wal-Mart reported results that missed Wall Street's expectations for the third time in five quarters and gave a weak second-quarter earnings forecast.

The results underscore the big challenges facing Wal-Mart's new CEO, Doug McMillon, who took over the top role on Feb. 1. The retailer is considered an economic bellwether, with the company accounting for nearly 10 per cent of nonautomotive retail spending in the U.S.

Wal-Mart's latest performance appears to show that many people are having a hard time stretching their money between paychecks.

For the period ended April 30, the Bentonville, Arkansas, company earned $3.59 billion, or $1.11 per share. That compares with $3.78 billion, or $1.14 per share, a year ago.

Wal-Mart Stores Inc. said that bad weather hurt earnings by about 3 cents per share. Its performance was also dinged by a higher-than-expected tax rate.

Income from continuing operations was $1.10 per share. Analysts, on average, expected earnings of $1.15 per share, according to a FactSet survey.

"Like other retailers in the United States, the unseasonably cold and disruptive weather negatively impacted U.S. sales and drove operating expenses higher than expected," McMillon said in a statement.

Not only did weather affect store traffic, it disrupted the supply chain, slowing production and backing up trucking transportation around the country, the company said.

But Wal-Mart has been suffering from weak sales in the U.S. for some time. Sales at U.S. stores open at least a year dipped 0.2 per cent in the quarter, the fifth consecutive quarter of decline the metric, considered a key gauge of a retailer's financial performance. Analysts had been expecting the measure to be flat.

In the U.S., while jobs are easier to get and the housing market is gaining momentum, these improvements have not been enough to get Americans to spend. On top of that, the Nov. 1 expiration of a temporary boost in food stamps is hurting its shoppers' ability to spend.

"Traffic continues to be negative, despite investments in price, TV marketing, and social marketing," said Belus Capital Advisors analyst Brian Sozzi. "Walmart's traffic troubles are part related to weather in the first quarter, but also very reflective in how people are now shopping (online) and the company not being able to full play in that trend."

Total revenue rose 1 per cent to $114.96 billion. Wall Street was calling for higher revenue of $116.43 billion.

The stronger dollar hurt revenue by about $1.6 billion. Excluding that, revenue would have risen 2 per cent.

McMillon said in a prerecorded call that U.S. sales rose during the second half of the quarter, but that Sam's Club had lower-than-expected sales. While membership income climbed, McMillon said it was mostly because of a fee increase started last year.

Total U.S. revenue rose 2 per cent to $67.85 billion. Wal-Mart International's sales rose 3.4 per cent in the quarter, on a constant currency basis.

Wal-Mart, which has 10,994 stores in 27 countries, is facing stiff completion from dollar chains and online king Amazon.com.

Wal-Mart has been sharpening its focus on everyday low prices at U.S. stores and further pushing that strategy abroad. Wal-Mart also said earlier in the year that it will speed up growth plans for its smaller Neighborhood Markets and Wal-Mart Express stores that cater to shoppers looking for more convenience with fresh produce and meat and household and beauty products.

In a call with the media, Wal-Mart executives said super centres are getting bigger purchases on each trip from people stocking up on bulk items, but traffic has been weaker, particularly in the bottom performing 10 per cent of its stores.

At Neighborhood Markets, on the other hand, traffic is up 4 per cent as people buy fill-in items at the smaller stores.

For the second quarter, Wal-Mart anticipates earnings from continuing operations in a range of $1.15 to $1.25 per share. Analysts predict earnings of $1.28 per share.

The company's shares fell $1.88, or nearly 2 per cent, to $76.85 in premarket trading just before the market opened.

__

AP Business Writer Michelle Chapman contributed to this report.

The Canadian Press


Read more Business News

22426


Recent Trending




Today's Market
S&P TSX15556.09-5.86
S&P CDNX1002.205.50
DJIA17039.4960.36
Nasdaq4532.104+5.623
S&P 5001992.37+5.86
CDN Dollar0.9135-0.0005
Gold1276.30-17.10
Oil96.30+1.82
Lumber355.50-0.10
Natural Gas3.876-0.013

 
Okanagan Companies
Pacific Safety0.18-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.210.00
Cantex0.065-0.005
Anavex Life Sciences0.260.00
Metalex Ventures0.075-0.01
Russel Metals37.59+0.14
Copper Mountain Mining2.88-0.04
Colorado Resources0.1850.00
ReliaBrand Inc0.095+0.01
Sunrise Resources Ltd0.025-0.005
Mission Ready Services0.215-0.015

 



22426

FEATURED Property
17851991615 Pritchard Drive, Kelowna
6 bedrooms 6 baths
$2,995,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Joint accounts: what you need to know!

Establishing a joint account may seem like a great strategy at first glance. However, there are many factors that must be considered before taking this action. This article will explore the use of &ls...


Cost of an Injury Lawyer

Let’s face it; nobody wants to pay for legal services if they do not have to, but if you have been injured in an accident you may have thought about hiring a lawyer to help you navigate your cla...


Managing a business in 40 hours a week

My screen printing business, like many others, started as a one-man operation. It was located in a small building, not much better than a shack, with a telephone, a big table where I ate lunch and (oc...

_








Member of BC Press Council


22851