Wal-Mart Predicts Slow Growth For Next 3 Years, Decline in Profit
Wal-Mart delivered some less than exciting news to investors at its earning forecast on Wednesday. Wal-Mart is predicting slow growth for the next three years and declines in profits for the 2017 fiscal year.
Wal-Mart (WMT) shares are down more than 9.5 percent in late-day trading Wednesday on the news that growth for the company for the next three years would be at a disappointing three to 4 percent. Additionally, Walmart forecasts that profits would decline 12 percent for the fiscal year 2017, according to USAToday.
In 2015, Wal-Mart shares are down 29 percent. The company's investors saw $18 billion in market value disappear today alone and $79 billion for the year.
While Wal-Mart struggles for the year, Amazon is thriving. Amazon has been one of the top stocks for 2015, up 75.7 percent for the year. The Standard & Poor's 500 has fallen 2.9 percent for the year, but Amazon continues to perform well.
Wal-Mart's market value is now 30 percent less than Amazon's. Amazon is now worth $255.1 billion.
To counter the bad news delivered to investors on Wednesday, Wal-Mart announced a $20 billion share buyback program.
Wal-Mart is making significant investments in its business. It is raising its employees minimum wages to $9 per hour this year and then to $10 per hour next year, a combined cost of $2.7 billion. Wal-Mart will also invest $2 billion on its website division, The New York Times reports.
Wal-Mart's chief executive Doug McMillon said it is important that the company invests in itself. McMillon added he thinks Wal-Mart has the advantage over Amazon due to its physical locations and says they can improve their e-commerce business to better compete with Amazon.
McMillon said he was willing to close stores that were under-performing and even sell assets. This led to speculation that Wal-Mart could sell businesses like poorly performing Sam's Club.
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