Wal-Mart Stores Inc (NYSE:WMT) cut its annual sales forecast on Wednesday, citing a stronger dollar and the impact of food stamp reductions, and said it would slow store openings in the next financial year as it shifts spending to its online business.
Shares of the world's largest retailer extended losses after the announcement of the sales guidance cut. They closed 3.6 percent lower at $75.2.
Wal-Mart, which recorded $473.1 billion in sales in its last financial year, said it now expects sales to rise 2-3 percent in the current year to Jan. 31, 2015. It had previously estimated growth at the low end of a 3-5 percent range.
"We experienced a tougher sales environment globally than we anticipated a year ago," Chief Financial Officer Charles Holley told an annual meeting with investors and analysts held in Rogers, Arkansas, not far from the company's headquarters.
The two biggest factors holding back growth have been the stronger U.S. currency, which hits the profits of its overseas businesses, and a reduction in food stamp benefits, which cut into the budgets of low-income consumers who form the core of its customer base in the United States.
Wal-Mart said it expected revenues to expand 2-4 percent in the next financial year to January 2016, with operating income growing at the same rate or slower than sales, reflecting up to $500 million in additional investments in its e-commerce business.
Wal-Mart has posted six straight quarters of flat or declining growth in same-store sales, and the lower sales forecast suggests a recovery could take longer than anticipated. The company did not provide a timetable for a pickup in growth.
In a sign of its cautious view on the U.S. market, the company said it would slow store openings in the next financial year. Including conversions, it plans to open 60-70 Supercenters, its large-format stores that contain full-sized supermarkets, down from 115 this year.
The retailer also scaled back openings of its smaller-format stores, which have been performing well. It plans to open 180-200 of those stores, called Neighborhood Markets, compared with 270-300 openings this year.
Wal-Mart Chief Executive Douglas McMillon said that lower fuel prices were "working in our favor" but that there was "room for improvement" across its stores, including better stocking of its shelves.
(Reporting by Nathan Layne in Rogers, Arkansas; Siddharth Cavale and Devika Krishna Kumar in Bangalore; Editing by Kirti Pandey; and Peter Galloway)