Wal-Mart cuts annual sales forecast, slows store openings

Wal-Mart Stores Inc cut its annual sales forecast on Wednesday, citing a stronger dollar and the impact of food stamp reductions, and said it would slow store openings in the next financial year as it shifts spending to its online business.

Shares of the world's largest retailer extended losses after the announcement of the sales guidance cut. They closed 3.6 per cent lower at $75.2.

Wal-Mart, which recorded $473.1 billion in sales in its last financial year, said it now expects sales to rise 2-3 per cent in the current year to January 31, 2015. It had previously estimated growth at the low end of a 3-5 per cent range.

"We experienced a tougher sales environment globally than we anticipated a year ago," Chief Financial Officer Charles Holley told an annual meeting with investors and analysts held in Rogers, Arkansas, not far from the company's headquarters.

The two biggest factors holding back growth have been the stronger US currency, which hits the profits of its overseas businesses, and a reduction in food stamp benefits, which cut into the budgets of low-income consumers who form the core of its customer base in the US.

Wal-Mart said it expected revenues to expand 2-4 per cent in the next financial year to January 2016, with operating income growing at the same rate or slower than sales, reflecting up to $500 million in additional investments in its e-commerce business.

Wal-Mart has posted six straight quarters of flat or declining growth in same-store sales, and the lower sales forecast suggests a recovery could take longer than anticipated. The company did not provide a timetable for a pickup in growth.

In a sign of its cautious view on the US market, the company said it would slow store openings in the next financial year. Including conversions, it plans to open 60-70 Supercenters, its large-format stores that contain full-sized supermarkets, down from 115 this year.

The retailer also scaled back openings of its smaller-format stores, which have been performing well. It plans to open 180-200 of those stores, called Neighborhood Markets, compared with 270-300 openings this year.

Wal-Mart Chief Executive Douglas McMillon said lower fuel prices were "working in our favour" but that there was "room for improvement" across its stores, including better stocking of its shelves.

To end minimum wage pay

Wal-Mart Stores plans to improve opportunities for its employees so that in the future there will no longer be a few thousand workers on its payroll making minimum wage, the chief executive said.

The act of upgrading minimum wage positions would be largely a symbolic move for Wal-Mart. Currently only about 6,000 workers make the minimum out of its US workforce of 1.3 million. Wal-Mart says its average full-time hourly wage is $12.92, compared with the federal minimum wage of $7.25.

But the comments from CEO Douglas McMillon could draw some attention amid the contentious national debate over proposals to raise the minimum wage. Wal-Mart is the largest private employer in the US and a prime target of labour activists who say it doesn't pay workers a living wage.

"We only have a few thousand associates in the US, less than 6,000 of our 1.3 million associates in the US, that currently make a minimum wage and it is our intention over time that we will be in a situation where we don't pay minimum wage at all," McMillon told reporters when asked about the issue following an investor conference.

McMillon said the move would be part of a larger effort to "invest in its associate base". It could also look at using promotions and bonus payments to improve opportunities for workers, he said. He didn't disclose further details.

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