Wal-Mart Stores Inc., the world’s largest retailer, lowered its annual sales forecast after the strong dollar pulled down the value of overseas revenue.
The company now expects net sales growth to be flat this year, compared with a previous forecast for growth as high as 4 per cent, according to a statement Thursday.
The outlook signal that Wal-Mart still faces hurdles in bouncing back from several years of slumping growth. Its U.S. same-store sales increase also was slow last quarter, rising just 0.6 per cent.
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That fell short of the 1 per cent analysts had predicted.
Excluding some items, earnings were US$1.49 a share in the fourth quarter, the Bentonville, Arkansas-based company said. Analysts had predicted US$1.46 on average, according to data compiled by Bloomberg. Fourth-quarter revenue fell 1.5 per cent to US$129.7 billion, also hurt by currency effects. Analysts had predicted US$130.6 billion.
In Canada, Wal-Mart reported a 5.8 per cent rise in net sales, and a 4.3 per cent increase in sales at stores open for more than a year, which strips out the affects of added square footage. Store traffic increased two per cent.
The currency headwinds could hamper a rally for Wal-Mart after a dismal 2015. The stock fell 29 per cent last year but has shown signs of rebounding in 2016, gaining 7.8 per cent despite a tumbling market. Investors view the discount retailer as a safe haven if the U.S. economy enters a recession.
It may also gain from rising wages, particularly among lower-income consumers, and persistently low gas prices.
Wal-Mart’s profit has been hurt by slowing U.S. sales, as well as increasing spending on employee pay and its online operations. Wal-Mart will pay US$1.5 billion in higher wages in the fiscal year ending January 2017 as it raises its minimum wage to US$10 an hour and gives a one-time raise to more than 1 million employees this month. Those added wages will contribute to profit falling between 6 per cent and 12 per cent this year, the company has said.
Wal-Mart said last month that it will close 269 stores worldwide, including all of its small-format express stores.
Wal-Mart has been focused on fixing up its 4,600 U.S. stores after years of customer complaints about out-of-stock items, poor customer service and long waits at the checkout line. The company has raised pay in an effort to attract and retain better workers, implemented a new system to stock its shelves, and increased staff at the register.
So far, the company says the efforts are working. Last February, only 16 per cent of its U.S. locations met the company’s new standards for cleanliness and customer service. That number had reached more than 70 per cent as of November.
Bloomberg News, with a file from Hollie Shaw