Wal-Mart Stores Inc.’s share price down, cuts FY profit projection due to slow sales growth and higher expenses

The biggest retailer in the world – Wal-Mart Stores Inc. reported in an official statement today that its same-store sales were stagnant during the three months ended August 1st. The company also reduced its full-year earnings forecast due to bigger health-care expenses and additional investments made in its e-commerce business.

Under the lead of Mr. Doug McMillon, who took the position of a CEO this February, the company has concentrated on investing in e-commerce and smaller stores as it struggles to support its bottom line while its home-market sales have declined.

Sales at U.S. Wal-Mart stores, open at least 12 months or the so-called same-store sales were little changed last quarter, in line with company expectations. The worlds largest retailer has not posted same-store sales gain for six straight quarters, as customers are avoiding trips to big-box retailers. An indicator that tracks US store traffic dropped 1.1% during the observed period, marking a third quarterly decline.

As reported by the Wall Street Journal, the CEO Mr. McMillon said in the companys report: “We see opportunities to improve in merchandising, pricing and store level service in our supercenters, and we are working to close those gaps.” He also added: “As it relates to our challenges in the quarter, we wanted to see stronger comps in Wal-Mart U.S. and Sams Club, but both reported flat comp sales. Stronger sales in the U.S. businesses wouldve also helped our profit performance.”

According to the statement of Wal-Mart Stores Inc., its earnings for the year ending January 31st will be between $4.90 and $5.15 per share. This figures are lower than the companys initial projection of between $5.10 and $5.45. The company also said that it expects earnings in the range of $1.10 to $1.20 per share for the current period, while the median analysts estimate is $1.18 apiece.

The company explained that higher U.S. health-care expenses and increased e-commerce expenses forced it to cut its forecast for the full-year profit. Wal-Mart Stores Inc. said it expects health-care expenses to increase by more than $500 million. Currently, the company and its affiliates employ about 2.2 million people all over the world and owns more than 11,000 stores.

Wal-Mart Stores Inc. posted a profit that amounted to $4.09 billion dollars, or $1.26 per share for the quarter ended August 1st. This result surpassed the one reported by the U.S.-based company for the same period a year earlier, which amounted to $4.07 billion, or $1.24 per share. The companys earnings from continuing operations were $1.21 apiece.

Wal-Mart Stores Inc. was 0.16% down to trade at $73.91 per share by 14:58 BST (13:58 GMT). The companys shares have lost 3.26% over the past twelve months, valuing the company at $238.64 billion. According to the information published on CNN Money, the 22 analysts offering 12-month price forecasts for Wal-Mart Stores Inc. have a median target of $81.50, with a high estimate of $90.00 and a low estimate of $66.00. The median estimate represents a +10.09% increase from the last price of $74.03.