Wal-Mart cuts sales outlook for year, shares fall

But Wal-Mart says EPS will return to growth by fiscal 2019, when it is expected to rise 5% to 10%. Bank of America (N:BAC) shares gained 0.11 or 0.71% to 15.64, after reporting earnings of $4.51 billion on the quarter, amid significant declines in legal costs for a third straight quarter.

Separately, the department said inventories at the end of August were unchanged from July to $1,811 billion but jumped 2.4% from a year ago month.

ANALYST’S OPINION: “Walmart’s sizable reset of expectations has shaken the overall market with general concern about both US and global growth”, said analyst Chad Morganlander, a money manager at Stifel, Nicolaus & Co.in Florham Park, New Jersey, which oversees about $170 billion.

Plenty of USA multinationals are suffering from the strong dollar, and Wal-Mart is no exception.

The dour outlook follows a protracted sales slump at Wal-Mart’s USA stores and mounting concern that the chain is losing ground to online competition such as Amazon.com Inc.

The company also forecast sales for its full fiscal year to be flat, hurt by unfavorable currency exchange rates.

Wal-Mart has also been trying to win back customers by improving the shopping experience, expanding its online grocery pickup service, and opening more small-format stores, called Neighborhood Markets, Bloomberg noted, but investors “have been skeptical that the changes will reignite growth”.

Wal-Mart has said about 500,000 of its 1.3m United States employees are getting raises and all employees will be able to benefit from the new scheduling and training programmes. Delta’s shares rose more than 2 percent in afternoon trading. Foran is spearheading a major overhaul of its USA business, which account for 60 percent of its total business. For its fiscal 2017, it said it expects earnings per share to be down 6% to 12%. The question it now faces is whether a retailer so heavily invested in brick-and-mortar stores can make the transition to Internet commerce. The stores have been criticized for messy aisles and not having enough workers to restock shelves.

Wal-Mart also announced a new share buyback program, with a fresh $20 billion earmarked for share buybacks over the next two years.

Shares nose-dived 10 percent on the announcement; the company’s stock has gone down almost 30 percent this year. The investments resulted in the retailer lowering its earnings guidance by as much as 12% for next fiscal year.