Walmart lowers earnings projections after online push hits profits
Asda-ower Walmart lowered its earnings forecast for the financial year, after it warned online retail acquisitions would hit profits.
The supermarket said its takeover of Indian e-commerce company Flipkart, the largest in the company’s history, would reduce earnings per share by 60 cents in the next financial year, and between 25 and 30 cents this year.
Read more: Walmart reckons profit will be largely flat next year
Walmart signed the $16bn (£12bn) deal for Flipkart in May to help it compete with Amazon in the vital online food sector.
Shares initially fell over two per cent today, but quickly bounced back and were trading up 1.8 per cent to $95.52 by early evening.
Revenue for the quarter grew by 3.8 per cent to $128bn, while online sales boomed 40 per cent following efforts to redesign its website and boost online grocery lines.
Meanwhile Walmart only plans to open ten new US brick-and-mortar stores in the coming year.
Net sales in the UK, Walmart’s third biggest market, increased 2.4 per cent as Asda works to merge with Sainsbury’s.
Chief executive Doug McMillon said: “We continue to work through the approval process regarding the proposed combination of Asda with Sainsbury’s in the U.K.”
Read more: Sainsbury's-Asda watchdog probe to include Aldi and Lidl
He added: “We're continuing to aggressively roll out grocery pickup and delivery in the U.S., and we recently announced expanded omni-channel initiatives in China and Mexico.
“Customers have choices and we're making it easier than ever for them to choose Walmart.”