Payroll taxes, petrol prices squeeze Walmart’s US customers
26 February 2013
Posted by: SAIT Technical
By Jessica Wohl (Business Day/Reuters)
attributed weak US sales to higher payroll taxes, petrol prices and
slow tax refunds affecting American Consumers. Its shares fell 1% in
WASHINGTON — Walmart Stores said on
Thursday that US sales weakness persisted into early February, as Americans
absorbed the effect 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. Walmart also raised its dividend
Its shares fell 1% in premarket
Walmart US, Walmart’s largest unit
by far, has had a slow start to this month, which Walmart US CE 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%.
"We are confident that our low
prices will continue to resonate, as families adjust to a reduced paycheque and
increased gas prices,” Mr Simon said.
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 1% in
the fourth quarter. The company had forecast an increase of between 1% and 3%,
and analysts, on average, had anticipated a 1.5% gain.
A year earlier, Walmart US
same-store sales rose 1.5%.
Still, Walmart 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
Walmart earned $5.61bn, or $1.67 per
share, from continuing operations in the fiscal fourth quarter, up from
$5.19bn, or $1.51 per share a year earlier.
Walmart had forecast a profit of
between $1.53 and $1.58 per share from continuing operations, and analysts
expected it to earn $1.57 per share, according to Thomson Reuters I/B/E/S.
Revenue rose 3.9% to $127.92bn.
The company forecast first-quarter
earnings per share of between $1.11 and $1.16, up from $1.09 a year earlier.
It also forecast fiscal-year
earnings per share of between $5.20 and $5.40, including about $0.09 in
increased costs for its e-commerce operations. It earned $5.02 per share in
Walmart spent $157m last year on its
own probe of alleged bribery allegations in Mexico, Brazil, China and India.
A New York Times article in April
last year unveiled alleged bribery at the major Mexican unit.
The company said its forecast
includes about between $40m and $45m in first-quarter costs related to foreign
corrupt practices and compliance matters.
Walmart said its fiscal year 2014
dividend would be $1.88 per share, up from $1.59 per share in fiscal 2013.