Wal-Mart Stores, Inc. (NYSE:WMT) on Tuesday reported less-than-expected revenue and profit growth in its fiscal first quarter compared to the same period last year, as a strong dollar impacted profits made in foreign currencies. The company said investments in e-commerce operations and a wage hike for its U.S. employees also impacted profitability.
Comparable store sales, a key measure of retail performance that Wal-Mart has been struggling with in recent years, increased 1.1 percent in the three months ended April 30, up from a decline in sales from established outlets of 0.4 percent in the same period last year. The disappointing earnings numbers indicate the Bentonville, Arkansas, retail giant has more work to do.
Net income dropped 7 percent, to $3.34 billion, or $1.03 per share, from $3.59 billion, or $1.11 per share, in the year-ago period. Revenue declined slightly, to $114.82 billion from $114.96 billion. Wall Street had expected Wal-Mart to report first-quarter net income of $3.38 billion, or $1.05 per share, on revenue of $116.3 billion, according to analysts polled by Thomson Reuters.
“We’ve spent a lot of time over the past several months truly understanding what it will take to succeed over time in a rapidly-changing retail environment,” Greg Foran, head of the company’s U.S. operations, said in a pre-recorded management call. “We know, though, that we’re not where we want to be yet. It will take time to achieve our goals.”
Wal-Mart Stores shares dropped 2.69 percent to $77.77 in pre-market trading on Tuesday after the earnings were announced. The stock price has fallen 6.94 percent since the start of the year, but has gained 2.62 percent over the past month. The world’s largest retailer aims to roll out two services this year, including Alipay in China, plus a free shipping service to rival Amazon Prime.