Wal-Mart Profits Tumble

Business

by Roby Brock ([email protected]) February 20, 2014 8:05 am 119 views 

Revenues grew modestly, but profits took a tumble as Wal-Mart reported its fourth quarter and full year financials.

The Bentonville-based retail giant reported fourth quarter net income of $4.43 billion on sales of $128.8 billion, an increase of 1.4 percent over last year. The quarter included the negative impact of approximately $1.8 billion from currency exchange rate fluctuations.  Last year, Wal-Mart posted fourth quarter profits of $5.86 billion on revenue of $127.77 billion.

For the full year, Wal-Mart posted net income of $16 billion on revenue of $476.29 billion, a 1.6% boost in sales and membership income.  However, full year profits were down 5.7% compared to $16.99 billion one year ago.

“Our company grew net sales this year to reach more than $473 billion. Global eCommerce sales, including acquisitions, surpassed the $10 billion mark, a 30 percent increase over last year,” said Doug McMillon, Wal-Mart Stores, Inc. president and CEO. “We will continue to grow our global business by focusing on customers and serving them how they want to be served.”

Other highlights from the quarter included:

  • Wal-Mart U.S. grew net sales 2.4 percent in the quarter and comp sales declined 0.4 percent in the 14-week period ended Jan. 31, 2014. Comp sales for Neighborhood Market stores rose approximately 5.0 percent.
  • Wal-Mart U.S. will increase capital expenditures for fiscal 2015 to accelerate the rollout of small format stores, both Neighborhood Market and Walmart Express.
  • Wal-Mart International grew annual net sales to $136.5 billion, an increase of 1.3 percent.
  • Global eCommerce sales, including acquisitions, grew to more than $10 billion during fiscal 2014.
  • Wal-Mart estimated expenses for its Foreign Corrupt Practices Act investigation matters to range between $200 and $240 million for fiscal 2015.

McMillon, who took over the top spot at Wal-Mart on Feb. 1, also discussed the company’s priorities in an earnings release.

“Comp sales improvement is a key priority, and we’ll focus on being even stronger item and category merchants, delivering value and improving our service levels,” McMillon said. “Well remain focused on our expense structure, and innovate to improve productivity and aid our ability to deliver every day low prices. Our EDLP approach earns trust with customers and helps us keep our cost structure low.”

“We’ll invest aggressively in e-commerce and increase our small store rollout in the U.S., as we’ve done in several other countries, to deliver value and convenience. Today, we are announcing an increased capital allocation, above our previous forecast, to accelerate small store growth in the U.S.,” McMillon added. “The combination of supercenters and smaller formats closer to customers homes, along with e-commerce and mobile commerce, will enable us to increase our relevance for the Walmart brand around the world.”

Wal-Mart’s stock closed trading Wednesday at $74.85 per share. The company’s stock has traded between $69.72 and $81.37 per share during the past year.