​Wal​mart issues profits warning and cuts sales outlook for 2015

Prior to the warning from CEO Doug McMillon about the impact of the dollar, the company was forecasting sales to grow one to two per cent this year.

The retailer has lowered its profit forecast once already in 2015 and the shares are now down 29pc in the year to date.

The retail giant WMT, -8.40% said it has drawn up a three-year plan that includes capital investments of about $11 billion in fiscal 2017 and another roughly $1.1 billion to be spent on e-commerce and digital initiatives.

Wal-Mart’s guidance shocker was actually no surprise, Moody’s Charles O’Shea said Thursday.

Wal-Mart is under pressure on that front as well, with smaller discounters posing a greater threat.

Meanwhile Amazon continues to surge ahead.

The world’s largest retailer said it expects sales growth to be flat for this fiscal year, as it faces unfavorable currency exchange rates.

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Cowen and Company analyst Oliver Chen, who has a “market perform” rating on Wal-Mart, likewise called attention to the ongoing improvement at its US stores.

Wal-Mart sank 9.7 percent to $60.23, poised for its worst one-day performance in more than 17 years, after it forecast a drop of up to 12 percent in earnings per share in fiscal 2017.

Wal-Mart’s stock tumbled on the Wall Street following the forecast of earnings drop in the range of 6-12 percent hammered down the market sentiment. Earlier this year, the company announced plans to increase the wages for more than 100,000 of their employees.

While Walmart works to ramp up its eCommerce efforts, the company – like most big box retailers – has struggled to keep consumers stepping foot in stores.

Shares dropped US$6.70 or 10% to US$60.03, the biggest dip since January 1988, and the stock’s lowest level since March 2012. “They do $500bn worth of revenue – how are you going to grow that?” In another negative development, it reported that operating expenses would eclipse its sales growth for the fiscal year, which has not been aided by the much-publicized raising of its pay-floor, which will reportedly cost it $1.2 billion in fiscal year 2016.

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.

The money will also be spent on expanding and improving its curbside grocery pickup service, building more warehouses to handle online sales, and on store expansion.