US stocks drop; Wal-Mart slumps on weak guidance

Holley said Wal-Mart has plans to buy back $20 billion of its shares within the next two years, a move that can improve the stock price as ownership of the company is divided into fewer shares. During its annual meeting at New York City this Wednesday, Doug McMillon, their CEO tried to reassure investors that profit declines in the coming year is all a part of their plan to position themselves for the future.

Wall Street did not like what Wal-Mart execs had to say on Wednesday (Oct. 14) about the heavy investments in people, technology and supply chain changes.

You may recall, earlier this year, Wal-Mart led the charge in raising wages for about 500,000 workers. The initiative, paired with an extensive training program, added around $1bn in costs this year and will add roughly $1.5bn next year. It’s now exceeding Wal-Mart’s market value by 30 percent.

USA stocks traded lower on Wednesday after Wal-Mart and JPMorgan disappointed investors.

Aside from operational and competitive challenges, the strong dollar will cost the company $15 billion in revenue this year, according to remarks McMillian made to a rival news organization.

Companies from all sectors have been warning that the strength of the USA dollar against foreign currencies is weighing on their results for the last several quarters, and Wal-Mart blamed currency headwinds as well.

Employees at the retail giant were making a minimum of $9 (£5.76) an hour in April and will get at least $10 an hour in February next year.

BlackRock, Inc (BLK) jumped 2.2% or $7.19 to $322.31 after the investment management company said revenues in the third-quarter ending in September rose 2% from a year ago to $2.91 billion. Chief financial officer Charles Holley said fiscal year 2019 earnings would rise five-10 per cent compared with the prior year. Wal-Mart guided for EPS to decline by 6%-12% in 2017, driven by investments in higher wages and e-commerce, with earnings growth expected to return in 2018. The company has also stated that a few of the $2 billion will be invested in developing its online grocery shopping operations.

Its shares tumbled almost 9 percent to $60.83.

Wal-Mart employs about 38,350 associates in Indiana, which includes 94 supercenters, 10 distribution centers, eight discount stores, 8 neighborhood markets and 16 Sam’s Club locations, according to the firm’s website. He said the company will close a few stores internationally “that should be closed”, but “we don’t believe in shedding assets in a hurry for less than they are worth”.