Wal-Mart Stores Inc. reported lower profits but higher revenues during Tuesday’s call for the financial quarter report.
Profit in its first quarter fell by 7 percent as Wal-Mart is heading for a reorganizing of the business with investments in e-commernce, raising employee’s wages and accusing currency fluctuation.
Same-store profits were reportedly low. In analysts’ understanding this was caused by the lack in spending power consumers still accuse. Despite employment gains on the U.S. market, precaution is still a keyword. Therefore, for consumers who are saving on food and oil prices, the savings are crucial for an uncertain future.
In 2013 the Federal Reserve Board surveyed groups on their income. All those participating in the survey presented a lower mean income than in 2007. Mean wealth followed the same declining pattern.
Charles Holley, chief Financial Officer at Walmart stated concerning this matter:
“The numbers that you’re seeing in retail overall [show] the customer is still a little bit cautious, maybe optimistically cautious”.
At the same time Mr. Holley commented on the wage increase planned by Wal-Mart Stores Inc., saying it positively impacted their employees and helped raise customer satisfaction as well. On the long run this will undoubtely prove beneficial for the company if it results in sales lifting.
As same-stores are still lagging behind, Wal-Mart is investing in smaller format stores, friendlier and probably more accesible to customers. Fresh products and a larger variety of groceris will be included on the shelves.
At the same time it plans to launch in e-commerce. Last week it announced the soon-to-come delivery service for a 50 dollar subscription.
As an overview, Wal-Mart’s same stores reported a 1.1 percent tick in the first quarter. Wall Street had previously placed them at 1.5 percent. Analysts estimates set the total revenue to 116.3 billion dollars. The report came with a 0.1 percent decrease, to 114.8 billion dollars.
Profit also fell from 3.59 billion dollars last year to 3.34 billion dollars. In shares, Wal-Mart fell from 1.11 per share in the previous year to 1.03 percent.
Overall, in pre-market trading, the Wal-Mart shares fell by 2.5 percent to 78 dollars.
In the U.S., the world’s biggest retailer’s sales remained at a slight gain for all three months of the fiscal year.
International sales suffered a blow however as the dollar held strong and caused sales to diminish.
Online sales increased by 17 percent, presenting a slower rate compared to the previous two years, yet a much faster pace than U.S. and international sales combined.
Image Source: The Nation
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