Wal-Mart shares dropped 1.7 percent Thursday after the retailer reported its profits and revenues were below the expectations for the first quarter. Its same-store sales declined 1.4 percent, which excluded fuel. Wal-Mart expected sales to remain unchanged and the number missed the estimates made by analysts. The numbers have been disappointing for the company as it tries to stay profitable in time when consumers have shifted to online shopping.
Total revenue for the first quarter was $114.2 billion, which was 1 percent higher to the same quarter last year. The worldwide discount shopping giant managed to get earnings close to analysts’ estimates. Its earnings were $1.14 per share, which was a 4.6 percent increase compared to last year’s first quarter. The average estimate in the Thomson Reuters survey was $1.15 per share. Wal-Mart dropped $1.36 to close at $78.50.
Consumers usually reduce their shopping after the holiday season. Wal-Mart’s slower sales were due to the higher payroll taxes and the two week delay in income tax refunds. The said factors have hit most lower-income shoppers, which are Wal-Mart’s target audience.
Wal-Mart CFO Charles Holley said that customers started to feel their paychecks were less than before. He added that if the two weeks consumers didn’t have their tax refunds were removed from the quarter, sales would have remained flat. The company said that the tax refund delay made consumers delay their discretionary purchases.
CEO Mike Duke said that Wal-Mart had a more difficult quarter than what was estimated when the company announced its guidance in February. He said that it was vital to note that the company continued to gain market share in various categories.
The colder than usual spring also delayed purchases for spring items, such as supplies for maintaining one’s garden. He described spring to be so brisk. Duke said that northwest Arkansas experienced the latest snowfall in the state’s history.