Wal-Mart: Tax refund delay, high gas prices to flatten sales
Wal-Mart Stores Inc. beat expectations for its most recent fiscal quarter, but the world’s largest retailer is now warning that higher payroll taxes, income tax refund delays and lofty gas prices will cause stagnant sales during the current quarter.
For the mega-chain’s fourth quarter, which ended Jan. 31, profit boomed 10.6% to $1.67 per share from $1.51 per share during the same quarter a year earlier. The gauge outperformed Wal-Mart’s forecast of up to $1.58 per share.
Executives attributed the surge to a lower-than-expected effective tax rate of 27.7%. The company also announced a dividend of $1.88 per share for fiscal year 2014 -- an 18% boost.
Mike Duke, chief executive of the Bentonville, Ark. chain, said in a statement that he had “high expectations†for the coming year.
Same store sales at Wal-Mart U.S. -- the business’ biggest sector -- increased 1% in the fourth quarter, representing the impact of an expanded layaway program and other holiday efforts.
But Wal-Mart had predicted that the measure would increase as much as 3%. During the same period a year earlier, same store sales for the segment swelled 1.5%.
Wal-Mart U.S., however, managed to gain market share in categories such as food, health and wellness, entertainment and toys. Net sales for the group rose 2.6% over the quarter to $64.7 billion.
Across all of Wal-Mart, revenue jumped 3.9% to $127.1 billion.
The current first quarter, however, could be even less rosy.
February sales got a slow start, “due in large part to the delay in income tax refunds,†said Wal-Mart U.S. Chief Executive Bill Simon in a statement. As a result, the division expects same store sales for the quarter ending on April 26 “to be around flat.â€
During the same quarter a year earlier, the gauge rose 2.6%. Executives expect earnings per share for the period to fall to between $1.11 and $1.16.
Around midday in New York, Wal-Mart stock was up nearly 3% at $71.05 a share.
“We are confident that our low prices will continue to resonate, as families adjust to a reduced paycheck and increased gas prices,†Simon said.
ALSO:
UFCW union will stop Wal-Mart protests -- for now
Wal-Mart limits ammunition sales as demand soars
Wal-Mart supplier denies knowing clothes made in Bangladesh factory
Inside the business of entertainment
The Wide Shot brings you news, analysis and insights on everything from streaming wars to production — and what it all means for the future.
You may occasionally receive promotional content from the Los Angeles Times.
