What's really wrong with Wal-Mart | Business
By Matt Krantz, USA TODAY
Shares of Wal-Mart aren’t just struggling because the company missed first quarter earnings forecasts, although that didn’t help.
The real problem at Wal-Mart isn’t about profit, it’s revenue growth. Or rather, the lack therein. Wal-Mart reported revenue growth of just 0.8% during the quarter. That’s the lowest first-quarter revenue growth since since the depths of the last recession in the first quarter of 2009, when revenue fell 0.8%.
Wal-Mart is actually holding the line on profit margins, or how much it keeps from revenue after paying all its costs. And Wal-Mart says revenue would have increased 2.1% in the first quarter excluding the hit from currency swings. The company also blamed the weather, which might be a legitimate excuse this year. Wal-Mart Thursday reported a first-quarter profit of $1.10 a share, missing the S&P Capital IQ consensus estimate by 4%.
Yet, the problem is that Wal-Mart hasn’t been driving revenue higher for many quarters, something that investors will want to see addressed. While shares of Wal-Mart are up 35 cents to $77.18 Friday, they’re are down 2.3% this year and off 3% since just late April.