Business

Wal-Mart’s US customers hit by payroll taxes, petrol prices

February 21, 2013

Customers are seen at a Wal-Mart market in Miami, Florida in this file picture. Wal-Mart earned US$5.61 billion (RM17.46 billion), or US$1.67 per share, from continuing operations in the fiscal fourth quarter. – Reuters picCustomers are seen at a Wal-Mart market in Miami, Florida in this file picture. Wal-Mart earned US$5.61 billion (RM17.46 billion), or US$1.67 per share, from continuing operations in the fiscal fourth quarter. – Reuters picNEW YORK, Feb 21 – Wal-Mart Stores Inc said today that US sales weakness persisted into early February, as Americans absorbed the impact of higher payroll taxes and petrol prices, along with slow tax refunds that put some spending on hold.

The weakness overshadowed the world’s largest retailer’s bigger-than-expected profit increase, which was helped by a lower-than-anticipated tax rate. Wal-Mart also raised its dividend payout.

Its shares fell one per cent in premarket trading.

Walmart US, Wal-Mart’s largest unit by far, has had a slow start to February, which Walmart US Chief Executive Bill Simon attributed largely to a delay in income tax refunds. The company expects sales at Walmart US stores open at least a year, or same-store sales, to be about flat during the current first quarter. A year earlier, such sales rose 2.6 per cent.

“We are confident that our low prices will continue to resonate, as families adjust to a reduced paycheck and increased gas prices,” Simon said in a statement.

Efforts such as extending its layaway programme and matching competitors’ prices attracted shoppers during the competitive holiday season, but Walmart US same-store sales rose just one per cent in the fourth quarter. The company had forecast an increase of one per cent to three per cent, and analysts, on average, had anticipated a 1.5 per cent gain.

A year earlier, Walmart US same-store sales rose 1.5 per cent.

Still, Wal-Mart said its biggest unit gained market share in major categories of food, consumables, health and wellness and over-the-counter medications, as well as in entertainment and toys, which are big sellers during the holiday period. It cited data from Nielsen and the NPD Group.

FORECASTS PROFIT GROWTH

Wal-Mart earned US$5.61 billion (RM17.46 billion), or US$1.67 per share, from continuing operations in the fiscal fourth quarter, up from US$5.19 billion, or US$1.51 per share a year earlier.

Wal-Mart had forecast a profit of US$1.53 to US$1.58 per share from continuing operations, and analysts expected it to earn US$1.57 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 3.9 per cent to US$127.92 billion.

The company forecast first-quarter earnings per share of US$1.11 to US$1.16, up from US$1.09 a year earlier.

It also forecast fiscal-year earnings per share of US$5.20 to US$5.40, including about nine cents in increased costs for its e-commerce operations. It earned US$5.02 per share in fiscal 2013.

Wal-Mart spent US$157 million last year on its own probe of alleged bribery allegations in Mexico, Brazil, China and India. A New York Times article in April 2012 unveiled alleged bribery at the major Mexican unit.

The company said its forecast includes about US$40 million to US$45 million in first-quarter costs related to foreign corrupt practices act and compliance matters.

Wal-Mart said its fiscal year 2014 dividend would be US$1.88 per share, up from US$1.59 per share in fiscal 2013. – Reuters

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