Wal-Mart Lifts Profit Outlook as Sales Grow
August 18 2016 - 08:10AM
Dow Jones News
Wal-Mart Stores Inc. reported stronger-than-expected same-store
sales growth in the latest period, with slightly more shoppers
heading to its stores at a time when many retailers are struggling
to attract foot traffic.
The retailer also lifted its profit outlook for the year. Shares
rose 3.5% to $75.48 in premarket trading.
Same-store sales at Wal-Mart's U.S. stores rose 1.6%, above its
guidance for a 1% increase. Meanwhile, traffic rose 1.2%. Both are
signs that the retailer's store improvements and labor investments
are paying off.
Many retailers have struggled recently to grow sales. Target
Corp. said Wednesday that its same-store sales fell for the first
time in more than two years as fewer shoppers visited its
locations, while Macy's Inc. last week said it would shut 100 more
stores, or 14% of its physical base, as shoppers increasingly opt
to make purchases online and spend more on services than on
goods.
Demand for clothing and household items in recent years has been
markedly softer than during past economic recoveries. What demand
there is has been shifting online away from traditional retailers
such as Macy's, Kohl's Corp. and Nordstrom Inc., which all reported
lower quarterly sales this week.
The Bentonville, Ark.-based Wal-Mart has been spending heavily
to get customers back into its stores. It has worked to better
stock its stores, improve efficiency and boost the pay for its
employees. Operating, selling, general and administrative expenses
climbed 4.6% in the latest period.
The company has also invested in its lackluster online
operations as Amazon.com Inc. continues to grow sales quickly.
Earlier this month, the company announced plans to purchase
discount e-commerce retailer Jet.com Inc. for $3.3 billion, the
largest purchase to date of an e-commerce startup. Wal-Mart also
tapped Jet's founder Marc Lore to lead its e-commerce efforts once
the deal is complete.
In the second quarter Wal-Mart reported global e-commerce sale
rose 11.8%.
Over all, Wal-Mart reported earnings of $3.77 billion, or $1.21
a share, compared with a year-earlier profit of $3.48 billion, or
$1.08 a share. Excluding the gain from the sale of its Yihaodian
website in China, the company earned $1.07 a share. The company had
said earnings would land between 95 cents and $1.08 a share.
Revenue edged up 0.5% to $120.85 billion. In constant currency,
revenue rose 2.8%. Analysts estimated $120.16 billion in
revenue.
The company now sees full-year earnings in a range of $4.15 to
$4.35 a share. Analysts were expecting $4.27. The company
previously guided for earnings between $4.00 and $4.30.
Write to Joshua Jamerson at joshua.jamerson@wsj.com and Sarah
Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
August 18, 2016 07:55 ET (11:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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