Companies
26/02/2016

Walmart Showed the Worst Results in 35 Years


Net income of Wal-Mart - the world's largest retailer - fell by 8%, revenues declined by 1.5% according to a report for the fourth quarter of 2015, published on Thursday. The company's revenue for the whole of last year fell by 0.7%. This is the retailer’s worst result over the past 35 years. The main reasons for such a poor performance - the growth of the dollar, what caused a decline in revenues of the company’s international division, as well as increasing competition from online retailers.



On Thursday, US retailer Wal-Mart has published its financial statements for the fourth quarter of last year, which ended on 31 January, and for the full year 2015. Net income fell in the fourth quarter by 7.9%, to $ 4.57 billion. The company’s operating profit decreased by 16.4% during this period, compared to the same period of 2014 and amounted to $ 6.6 billion. Quarterly revenue of Wal-Mart also decreased - by 1.5%, to $ 129.7 billion. Revenues for the entire 2015 also fell by 0.7%, to $ 482.1 billion. This is the first decline in revenue since 1980. In addition, Wal-Mart has worsened forecasts for financial performance for the current year. Previously, the company expected 2016 sales to grow by 3-4%, it is now expected to remain around last year's level.

Among the reasons for the company’s not successful performance - growth of the dollar, expenditures on closing several hundred stores planned for this year, as well as increasing competition from online retailers. Due to the strong dollar, the closure of more than a hundred stores in Latin America, and the deteriorating economic situation in China and Brazil, Wal-Mart business’ international revenue decreased by 9.7%, to $ 32.7 billion in the fourth quarter. The retailer is also lagging behind its competitors in the field of e-commerce. In the reporting period, revenues from online trade grew by 8%, this is slowdown in revenue growth. In the first quarter of 2015, it amounted to 17%, in the second - 16%, and in the third - 10%. Revenues of the core Wal-Mart’s competitor - retailer Amazon - grew by 26% in the fourth quarter (in the first quarter, the growth was 15%). In January, Wal-Mart reported its intention to close 269 stores, mainly in the US (154 stores) and Brazil (60 stores). The decision on liquidation of shops was made after studying the company’s financial statements. In October last year, it was reported that Wal-Mart’s capitalization sharply declined by almost 10%, or $ 20 billion.

source: forbes.com

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