Wal-Mart's margins fall on price cuts, spending on e-commerce
Wal-Mart Stores Inc on Thursday reported lower quarterly margins after it cut prices and invested heavily on expanding its e-commerce operations, and its shares fell nearly 3 percent.
Investors shrugged an increase in comparable sales, which have risen for three straight years as more people shopped at the company`s stores and made purchases online.
"Strategic price investments in key markets and the growing mix of our e-commerce business reduced the gross margin rate," Chief Financial Officer Brett Biggs said in a statement.
Wal-Mart said sales at U.S. stores open at least a year rose 1.8 percent, excluding fuel price fluctuations, during the second quarter ended on July 31. That is stronger than market expectations for a rise of 1.7 percent, according to research firm Consensus Metrix.
U.S. store visits increased 1.3 percent from 1.2 percent a year earlier.
Net income attributable to Wal-Mart fell 23 percent to $2.9 billion, or 96 per cents per share, from $3.7 billion, or $1.21 per share, a year earlier due to a loss from repurchasing debt after a bond tender offer.
Excluding special items, earnings per share of $1.08 exceeded the analysts` average estimate of $1.07, according to Thomson Reuters I/B/E/S.
Gross margins were down 11 basis points to 25 percent, including a five-basis-point decline in the United States. Operating margins fell to 4.9 percent from 5.1 percent, and U.S. operating expenses rose 3.9 percent.
Online sales growth outpaced the industry at 60 percent but decelerated from the 63 percent increase in the previous quarter. That business added 70 basis points to comparable sales.
Wal-Mart raised the low end of its earnings outlook for the full year to $4.30 per share from $4.20, excluding items, while keeping the high end at $4.40.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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