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Retail

Increased Wages Force Walmart To Shrink Profit Forecast

Walmart has reduced its 2015 profit forecast, citing increased wages, currency exchange-rate changes, and added competition as reasons which necessitate this, theguardian.com reports.

The dip in expected profit owes mostly to the decision to pay 40 per cent of its employees (more than half a million people) more generous wages. The decision will cost the retailer $1.2 billion this financial year, and $1.5 billion over the course of the 2017 financial year.

Currency exchange rates mean that although the original sales-growth projected was between one per cent and two per cent, it is now almost flat.

Walmart CEO, Doug McMillon, said, “We all know that retail has changed and will continue to change at an accelerating pace,” indicating the figures are demonstrative of evolution in the retail landscape, as opposed to a disappointing performance.

"We can deliver stronger financial performance in the short-term simply by running our core business better but that won't be enough," he added.

© 2015 European Supermarket Magazine – your source for the latest retail news. Article by Peter Donnelly. To subscribe to ESM: The European Supermarket Magazine, click here.

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