US stocks slip at midday; Wal-Mart leads retailers lower

But its fourth-quarter results show that it will take time to fix its business.

According to Zacks Investment Research, “Wal-Mart Stores, Inc.is the world’s largest retailer”.

BONDS, CURRENCIES: The yield on the 10-year Treasury note fell to 1.74 percent from 1.82 percent.

Even if retail giants are able to turn business around by growing ecommerce sales, customers should not be surprised if more closures are on the horizon as the retail industry adjusts to this seismic shift.

Wal-Mart has spent aggressively to become more efficient, earmarking US$2 billion over two years to build out its e-commerce infrastructure, including on dedicated online fulfillment centers that can sort and ship packages at a lower cost.

Nordstrom shares dropped 6.7 percent after the department store operator’s quarterly profit missed expectations. However, the number of people visiting Wal-Mart’s stores rose 0.7%, which means that people were spending less in the stores. Its low-income shoppers remain cautious.

Wal-Mart Stores Inc.is also facing increasing competition from the likes of online leader Amazon.com, dollar stores and traditional grocers like Kroger, which are pushing lower prices.

As for the tepid sales growth, Walmart U.S. President and CEO Greg Foran noted that customers benefitted from lower gas prices, but topline pressures were caused by a lack of deflation in meat and dairy products, warm temperatures and delays in IRS tax refund checks at the end of the quarter. Wal-Mart is also battling market encroachment by dollar-store chains.

Wal-Mart reported $4 billion in returns to shareholders for the year through stock repurchase and dividend payment.

The retailer is also investing in fresh produce, writes the Journal, “a section of the store where [Walmart] has floundered but is a key determinant for where consumers choose to shop”.

After eliminating its fleet of 102 small-format Express stores, Walmart plans to spend this year doubling down on improving its thousands of supercenters and its newer Neighborhood Market concept, which is smaller than a traditional Walmart store and is focused primarily on groceries. “Today is just a bit of profit-taking from those that have benefited from the significant move”. Excluding some items, earning per share was $1.49, topping analysts’ estimates of $1.46 a share, helped by efforts to keep a lid on expenses.

The retailer’s e-commerce sales rose 8 per cent in the fiscal fourth quarter ended Jan 31, for a fourth straight period of decelerating growth. But he added, “We’ve still got a lot of work to do”. But with the retailer set to spend above $1.1 billion this year on e-commerce, investors are getting aggravated. That’s slightly lower than the $130.5 billion estimate from analysts.

The company now said it expects total sales for the year to be flat, down from its earlier forecast for a 3 percent to four percent growth.

Wal-Mart executives cited challenges in global markets, especially China, Brazil and Britain.

Walmart reported that sales at all U.S. stores clocked in at $81.5 billion during the quarter, a 2.4% increase from the same quarter a year earlier.

“New technologies is in our associates’ hands and better processes are creating efficiencies in the stores, driving higher-end stocks and a continuing decline in comp-store inventory”, Mr. Foran said in a conference call with analysts.

“It’s been a steady year”.

Wal-Mart stock sank $2.87, or 4.3%, to $63.24.

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