Thursday, April 24, 2014
The Associated Press
NEW YORK - The first few months of the year were tough for Walmart Stores Inc.
The world's largest retailer reported Thursday that its first-quarter profit edged up just slightly, and the company struggled with a sales slump with its core customers during the three-month period. The discounter also offered a quarterly profit outlook that came below Wall Street's projections. Its stock fell on the news.
Walmart blamed a litany of factors affecting its budget-conscious customers, including a payroll tax increase, delayed tax refunds, job worries and bad weather. It is the latest in a string of big-name, consumer companies from McDonald's to Macy's, to cite such hurdles in the first quarter of the year.
"Frankly, we had a more difficult quarter than expected," said Walmart's President and CEO Mike Duke in a pre-recorded call.
Walmart is considered an economic bellwether because the retailer accounts for nearly 10 percent of nonautomotive retail spending in the U.S. The latest results indicate that many American households with lower incomes continue to struggle even as the job and housing markets improve.
"This is a reality check for Walmart's low-income shoppers," said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisers. "The low-income shopper is even more financially stressed than people realize."
While the company said lingering cool weather into April was a culprit in a sales shortfall for seasonal goods like spring fashions and sporting goods such as camping gear, Charles Holley, Walmart's chief financial officer, told reporters on a conference call that economic worries loom large.
"Our customers tell us that jobs and employment are high on the list," he said.
Additionally, like many companies, Walmart said that business during the first quarter was hurt by the government's delay in processing income taxes and paying refunds.
Walmart earned $3.78 billion, or $1.14 per share, in the quarter that ended April 30. That compares with $3.74 billion, or $1.09 per share, a year earlier..