Walmart reported a fourth consecutive quarter of rising sales in the US but the effect of a strong dollar ate into its international sales and resulted in total revenues that fell short of market expectations.
The world’s largest retailer by sales also said it would slow its international expansion in China, Brazil and Mexico in order to focus on improving sales at its existing stores.
Walmart’s net income rose 5.7 per cent to $4bn, or $1.18 per share, just ahead of Wall Street expectations, but its shares fell 2.6 per cent to $72.50 in pre-market trading. The shares had rallied almost 21 per cent in the three months since its last earnings.
At Walmart-branded stores in the US like-for-like sales rose 2.2 per cent from a year ago in the three months to the end of July, completing a full year of growth since Walmart ended a nine-quarter string of declines caused by missteps in pricing and product choice.
Global net sales were up 4.5 per cent at $113.5bn, but Walmart said that excluding the impact of a stronger dollar and other currency effects they would have been $115.7bn.
Net revenue, which includes membership fees as well as sales, was $114.3bn versus Wall Street expectations of $115.8bn.
In its international business, which makes up 28 per cent of sales, growth excluding currency effects slowed to 7.2 per cent from 10.9 per cent in the previous quarter.
Announcing a slowdown in its store expansion plans in China, Brazil and Mexico, Mike Duke, chief executive, said: “We are moderating our strategic investment in new stores in three emerging markets, as we focus our leadership teams on improving [like-for-like] sales in existing stores. International remains our growth engine, but at a slightly slower pace.”
The retailer continues to be dogged by allegations that it paid bribes to open new stores in Mexico several years ago, which have triggered investigations by the US justice department, the Securities and Exchange Commission and lawmakers, as well as an internal probe.
This week two Democratic congressmen, who say Walmart is not co-operating with their probe into the company, said they had obtained documents that indicate the retailer may have been involved in money laundering violations and tax evasion in Mexico.
Responding to suggestions of money laundering violations and tax evasion, Walmart’s Mexican subsidiary, Walmex, said in a statement on Wednesday that it “has no knowledge that [it] is being investigated by Mexican authorities concerning these issues”.
“If any such investigation were to be initiated and Walmex notified of it, Walmex will co-operate with the authorities and to the extent permitted by law, will publicly disclose such facts,” it said.