Wal-Mart Predicts Slow Growth For Next 3 Years, Decline in Profit

The stock is down 30% this year, which may be the worst performance since 1973 and a sign the investor community has lost confidence in the retailer. For instance, Wal-Mart raised wages for worker and is expanding its online grocery options. The reinvestments are necessary, CEO Doug McMillon said, even though they might initially be met by lower earnings.

“There is a retail revolution going on with the transformation of Wal-Mart”, he told CNBC’s “Power Lunch” on Wednesday. He said the company expected to spend an additional $US1.2 billion on wages this fiscal year and another $US1.5bn in fiscal 2017. Amazon has surpassed Wal-Mart as the world’s largest retailer. Wal-Mart said in August it expects earnings of $4.40 to $4.70 a share, down from an earlier projection of as much as $5.05 a share.

Wal-Mart Stores, Inc. (NYSE:WMT) ended the day at $60.03 with the loss of -10.04%.

Over the last three years, Holley said, Wal-Mart has generated about $75 billion in net income.

Wal-Mart has been grappling with sluggish sales, leading investors to seek significant changes.

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. That’s after an estimated $12.4 billion of capital investments in fiscal 2016.

Wal-Mart Stores Inc. announced that its annual profits are set to decline and triggered the company’s stocks to drop the most in decades.

Discount retail giant Walmart on Wednesday said it expects operating revenue to decline during the next fiscal year, citing billion-dollar investments in its e-commerce capabilities and employee wages.

However, by the 2019 fiscal year we are expecting per share earnings to increase by between 5% and 10 % compared to the year before. The mauling evaporated over $21 billion in market value. Ahead of Wednesday’s plunge, shares were down 22 percent for the year.

Walmart announced 450 layoffs at its headquarters in Bentonville, Ark., last month, but a few observers say the job cuts aren’t over.

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.

McMillon acknowledged the high costs of Wal-Mart’s investments, but said they had helped the retailer turn around customers’ perceptions of its stores.