DE4CC0DE-5FC3-4494-BCBF-4D50B00366B5
Retail

Wal-Mart Trims Sales Forecast

By square1
Share this article
Wal-Mart Trims Sales Forecast

Wal-Mart Stores Inc., facing a retail slump and a decline in traffic to big-box chains, cut its annual sales forecast and predicted slower profit growth over the next three years.

Sales will rise 2 per cent to 3 per cent this fiscal year, the Bentonville, Arkansas-based company said today at its annual meeting with analysts. The company had previously projected growth of 3 per cent to 5 per cent.

The bleaker forecast sent shares down as much as 4.6 per cent to $74.43 in New York, marking the biggest intraday decline in a year. The stock had dropped 0.9 per cent this year through yesterday.

Chief Executive Officer Doug McMillon (pictured) is trying to revive growth at a company hampered by shaky retail spending and a decrease in traffic at big-box stores. Wal-Mart’s same-store sales - an industry benchmark of health - haven’t risen in six quarters. Investing more heavily in e-commerce also is key to Wal-Mart’s future success, McMillon said.

“We need to develop a more seamless relationship with our customers,” he said in a statement. “We won’t just be a store on the street. We’ll support our customers’ lives, with them in the driver’s seat, to save them money and time.”

ADVERTISEMENT

The 47-year-old executive, who took charge of the company in February, said today that he sees plenty of room for improvement when visiting Wal-Mart stores on surprise visits. McMillon said stores need to boost in-stock levels - a measure of the merchandise available on shelves for customers to buy. They also should address long checkout lines and improve staffing by increasing the number of worker hours.

Sales will grow 2.5 per cent to 3.5 per cent over the next three years, the company said today. Profit, meanwhile, will grow at a “somewhat slower” rate, Wal-Mart said.

‘No Excuse’

There’s “no excuse” for the company not to be doing better in the US, McMillon told analysts at the event. As part of its plan to entice more customers, the company is turning its focus to smaller-format stores and away from its traditional supercentres. Wal-Mart plans to open as many as 200 new Neighbourhood Market stores next year, compared with 60 to 70 supercentres.

ADVERTISEMENT

“We have to improve traffic, and that’s got my full attention,” Greg Foran, CEO of the company’s US division, told analysts.

The company is confronting a challenging retail environment as it heads into the holiday shopping season. Retail sales in the US dropped more than forecast in September, according to Commerce Department figures released today. The 0.3 per cent decrease followed a 0.6 per cent gain in August. The median forecast of 81 economists surveyed by Bloomberg called for a 0.1 per cent decline in September.

Bloomberg News, edited by ESM

Get the week's top grocery retail news

The most important stories from European grocery retail direct to your inbox every Thursday

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our terms & conditions and privacy policy. You can unsubscribe at any time.