Boston, MA 08/18/2014 (wallstreetpr) – Wal-Mart Stores, Inc. (NYSE:WMT) and other retail players are having a tough time in facing the challenges posed by the slowing industry. The weak store traffic and the higher health costs are leading to poor performance of the Wal-Mart stores. The trend was visible in the quarterly results where the sales and profit came higher for the quarter but still Wal-Mart cut down the outlook for the full year.
The challenges
Wal-Mart is finding it tough to return on the growth path. It stated that it doesn’t expect the sales to improve in coming quarters. It slashed its earnings guidance for the full year. It was the seventh consecutive quarter where Wal-Mart witnessed a drop in U.S. store traffic. The company doesn’t expect the online sales to grow in the coming year.
The consumer spending is expected to stay sluggish. It has to deal with the higher costs in terms of setting up new smaller-format stores. It will require making more investments in the e-commerce operations. The health care-expenses will continue to rise making it tough for the retail giant to boost its performance in the coming quarters.
The key points
Wal-Mart reported flat sales from its newly opened and closed stores of U.S. The sales came bit higher after five consecutive quarters of decline. Still, a slight improvement is insufficient to compete with the challenges faced by the store sales since 2012. The U.S. sales didn’t match up the expectations. The economy is slowing and is moving into the same phase in the second half of the year.
It is a bad news for the retail industry as a whole that had a tough first quarter due to the adverse weather climate affecting the sales. The spending has remained flat in July. The stores are dealing with the impact of heavy discounting. The disappointment is also seen in the internal structure of Wal-Mart Stores, Inc. (NYSE:WMT) where efforts to enhance the store merchandise and operations didn’t yield any positive results.
