Wal-Mart shares drop as company predicts lower profits

By fiscal 2019, Wal-Mart said it expects earnings per share to rise 5% to 10%.

However, the company lowered its revenue outlook for fiscal 2016, citing the impact of a stronger US dollar, and also forecast earnings to decline in fiscal 2017 due to heavy capital investments. In February, the company indicated that it expected net sales growth of between 1 and 2 percent.

Wal-Mart has said about 500,000 of its 1.3m U.S. employees are getting raises and all employees will be able to benefit from the new scheduling and training programmes.

Bank of America Corp (BAC) gained 1% or 16 cents to $15.68 after the financial services provider reported total revenues in the third-quarter ending in September dropped 2.3% from a year ago to $20.91 billion. McMillon said he still believes it was “the right decision to make”.

Earlier this month, Mr. McMillon unveiled plans to cut 450 jobs at the company’s Arkansas headquarters. The Waltons weren’t the only ones affected by the company’s bleak outlook, however.

Gearing up to compete with Amazon, Wal-Mart Stores Inc hiked investment in internet technology and raised wages. That includes basics like making sure stores are cleaner and well stocked. At the same time, the retailer is boosting its e-commerce infrastructure and raising wages for store employees. It has also been put $1bn into improving its website and opening new distribution centers, aiming to speed the delivery of online orders. For its next fiscal year, it said profit could fall by as much as 12 percent.

He said these factors would account for three-quarters of the expected 6-12% drop in earnings per share next year. It even expects its sales for this fiscal year to remain flat because of the unfavorable exchange rates.

“This is a growth company – it just happens to be a really large growth company”, McMillon said.

Walmart’s chief executive also said he is willing to close stores that are underperforming – which prompted speculation by a few analysts that company assets, like Sam’s Club, could possibly be sold off.

In an effort to appeal to shareholders, Holley said the company plans to utilize its new $20 billion stock repurchase agreement over the next two years as it will generate $80 billion in free cash over the next three years. As US healthcare enrollment increases, it will dramatically increase costs for the company.