By Michael Calia And Eric Morath 

Wal-Mart Stores Inc. on Thursday said it plans to boost the pay of its U.S. employees above the federal minimum wage in a push to help entry-level workers and amid a national debate about income inequality.

The retailer said it plans to pay its workers at least $9 an hour by the first half of the year, or $1.75 above the federal minimum wage, and $10 an hour by Feb. 1. The raises affect the company's 500,000 full-time and part-time associates at U.S. Wal-Mart stores and Sam's Clubs, or about a third of the company's 1.4 million U.S. workers.

Wal-Mart's move highlights larger debates over the pace of the economic recovery and the compensation of people toward the bottom of the wage scale. Last month, health insurer Aetna Inc. announced plans to raise the incomes of its lowest-paid workers by as much as a third to $16 an hour.

The news came as Wal-Mart posted its second straight quarter of same-store sales growth in the U.S. on an increase in traffic; however, the retailer also issued weaker-than-expected guidance for the year, in part on the higher pay for associates.

"These changes will give our U.S. associates the opportunity to earn higher pay and advance in their careers. We're pursuing a comprehensive approach that is sustainable over the long term," said Doug McMillon, Wal-Mart president and chief executive.

Mr. McMillon said in a news release that its initiatives will cost more than $1 billion in the fiscal year. The initiatives include Wal-Mart and the Wal-Mart Foundation committing $100 million over five years to help increase the economic mobility for entry-level workers.

"Beyond this commitment, Wal-Mart is also piloting a new, comprehensive on-boarding and training program to create clear career pathways for associates, so they can earn more and seek promotions," McMillon explained. "We're encouraging our associates to continue their education by providing no-cost access for them to complete their high school diploma or GED, as well as free and low-cost college credit to reduce the time and cost of earning a college degree."

The plans for the wage increase come after a group including some Wal-Mart workers had been pushing the retailer to institute a $15 minimum wage. Wal-Mart, which has said that only a small percentage of its U.S. employees are paid the minimum wage, said in May that it wasn't opposed to a boost in the federal minimum wage.

Mr. McMillon said in October that the company planned to end minimum-wage pay for all its workers over time. At the time, the average hourly Wal-Mart worker earned $11.83 an hour.

Congress hasn't voted to boost the federal pay floor since it rose to $7.25 in 2009. President Barack Obama has pushed for increases, while several states, including New York and California, have set wage increases in the near future.

Wal-Mart joins a number of other large retailers in paying workers more than the federal minimum.

Gap Inc. last year said the clothing retailer would raise starting pay to $10 an hour. Other companies, including Costco Wholesale, Hobby Lobby Stores Inc. and IKEA Group tout that all their workers earn more than the minimum wage.

At the same time, many states and cities have set minimum wages well above the federal level. Eight states, including California and Massachusetts, already mandate that all employers pay workers at least $9 an hour.

With states and companies raising pay floors, relatively few workers earn the federal minimum wage or less per hour, according to the Labor Department. In 2013, 3.3 million workers earned the federal minimum, or 4.3% of hourly wage earners. Of those workers, 14% worked in retail jobs. Nearly half worked in food service.

Low-wage employers, broadly, have seen wage pressures increase in the past year as the unemployment rate has fallen.

Mike Bufano, senior vice president for planning at Panera Bread Co. told investors this month that the company is paying "higher wages across-the-board" adding there is "war for talent" in the sector.

For the new year, Wal-Mart said it expected to post earnings of $4.70 to $5.05 a share. Analysts polled by Thomson Reuters had projected earnings of $5.19 a share and $497.2 billion in revenue for the year.

Wal-Mart also warned that its net sales could take a $10 billion hit if foreign-exchange rates remain where they are. The company said it now expects sales growth of 1% to 2%, down from its October guidance of 2% to 4% growth.

For the current quarter, Wal-Mart said it expected to post 95 cents to $1.10 a share in earnings, short of $1.14 a share predicted by analysts.

Shares of Wal-Mart, up 15% over the past year, fell more than 1% in premarket trading.

The retailer also raised its quarterly dividend to 49 cents a share, an increase of a penny. The boost brings the dividend yield to 2.3%, versus the 2.7% at rival Target Corp.

The holiday quarter was the company's second-straight period of growth in U.S. same-store sales, at 1.2%, including fuel, following several quarters of declines or flat performance. The company had expected same-store sales at U.S. locations to be flat or grow up to 1%.

The company has responded to dwindling traffic numbers with smaller store formats and investments in its online business. Traffic at U.S. stores rose 1.4%, reversing a trend of weakening traffic at the company's big-box locations.

For the quarter ended Jan. 31, Wal-Mart reported earnings of $4.97 billion, or $1.53 a share, up from $4.43 billion, or $1.36 a share, a year earlier. The company said in November that it expected to post $1.46 to $1.56 a share in earnings for the quarter, a range that fell below analysts' projections at the time.

Total revenue, which includes membership fees and other income, rose 1.4% to $131.6 billion, below analysts' recent projections of $132.4 billion.

The recent drop in gasoline prices weighed on same-store sales at Sam's Club, which sells the fuel along with bulk grocery and other items. Factoring in fuel, Sam's Club posted a decline of 0.4%, but excluding fuel sales grew 2%. Overall, same-store sales of Wal-Mart and Sam's Club combined rose 1.6% without fuel.

Write to Michael Calia at michael.calia@wsj.com and Eric Morath at eric.morath@wsj.com

Access Investor Kit for Aetna, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US00817Y1082

Access Investor Kit for Wal-Mart Stores, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US9311421039

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Walmart (NYSE:WMT)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Walmart Charts.
Walmart (NYSE:WMT)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Walmart Charts.