Walmart’s quarterly net income fell five per cent as bad winter weather and financial struggles kept customers from spending at the world’s largest retailer. The company’s shares fell 2.4 per cent as Walmart reported results that missed Wall Street’s expectations for the third time in five quarters, and gave a weak earnings forecast. The results underscore the big challenges facing Walmart’s new CEO, Doug McMillon, who took over the top role on February 1. Th
e retailer, which has 10,994 stores in 27 countries, is considered an economic bellwether, with the company accounting for nearly 10 per cent of non-automotive retail spending in the US.
For the three months ended April 30, the company earned $US3.59 billion, or $US1.11 per share.
That compares with $US3.78 billion, or $US1.14 per share, a year ago.
Walmart said bad weather hurt earnings by about three cents per share.
Its performance was also dinged by a higher than expected tax rate.
“Like other retailers in the United States, the unseasonably cold and disruptive weather negatively impacted US 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 Walmart has been suffering from weak sales in the US for some time.
Sales at US 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 US, 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 November 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.”
Walmart is facing stiff completion from dollar chains and online king Amazon.com.
AP
