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Wal Mart cuts trading outlook

Article By: ,  Financial Analyst
February 3, 2014 9:15 AM

The share price of Wal-Mart has fallen after the company cut its trading outlook and lowered its profits guidance for the year.

It revealed that profits are now likely to be at, or could even be below, the lower end of financial forecasts, while the company also confirmed it will be closing some stores in China.

In a statement, Wal-Mart said it would be shutting down 50 stores in Brazil and China as part of its restructuring plans for 2014.

Poorer trading over the course of the last few weeks was blamed by the firm on bad weather in the US in recent weeks. The country has been buffeted by storms in recent weeks and much of the US has been experiencing freezing temperatures for an extended period. Earnings for the current quarter are therefore likely to come in below the initial expectations of Wal-Mart.

Charles Holley, Wal-Mart chief financial officer, said: "Today, we are providing updated information on previously disclosed items, as well as new additional discrete items that were not anticipated when we provided our fourth quarter and full year guidance. These discrete items will impact EPS results for the fourth quarter and the year."

Full results

Full-year results are expected to be released by Wal-Mart on February 20th, but investors responded negatively to the warning issued by the firm relating to its likely profits.

Shares fell by as much as one per cent in the wake of the announcement and in after-hours trading they were down by a further 0.2 per cent following the news.

Wal-Mart is one of the biggest supermarket companies in the world and it owns the UK chain Asda, which has seen its fortunes slip in recent years as it dropped to the third largest company in the country, behind Tesco and the resurgent Sainsbury's.

However, Sainsbury's chief executive Justin King recently announced he is set to stand down, potentially opening the door for the Wal-Mart subsidiary to close the gap on market leader Tesco.

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