Wal-Mart Stores Inc (WMT.N) on Thursday tempered its profit forecast for the next two fiscal years due to investments in its online business, and the world’s largest retailer said store openings would slow.
Shares of the company, which is holding its annual investor day, fell 2.2 percent in premarket trading.
Wal-Mart said it expected flat earnings for the year ending on Jan. 31, 2018, with capital expenditures of about $11 billion. It had previously forecast profit growth.
Chief Financial Officer Brett Biggs said in an interview that the company would focus its capital spending on store remodels and e-commerce growth, with only about 20 percent for new store openings.
The company will moderate the rollout of its Neighborhood Market grocery stores, he said.
Wal-Mart has accelerated its investment in e-commerce and digital efforts from about $300 million in 2013 to $1.1 billion this year for a total of about $3 billion, excluding acquisitions, according to public filings and earnings reports.
Wal-Mart also recently spent more than $3 billion to buy e-commerce startup Jet.com.
E-commerce accounts for about 3 percent of Wal-Mart’s overall sales.
Biggs said Wal-Mart’s sales growth had been driven by new store openings in the past, but going forward, the retailer plans to increase revenue from existing stores and its online business.
Wal-Mart said it expected earnings-per-share growth of 5 percent in fiscal 2019. It previously forecast an increase of 5 percent to 10 percent.
The company reiterated its earnings forecast of $4.29 to $4.49 for this fiscal year. Excluding items, profit will be $4.15 to $4.35 per share, the company said in a statement.
REUTERS
