Walmart profit down 21 percent

The New York TimesFebruary 21, 2014 

Walmart Stores reported disappointing earnings for its fourth quarter and fiscal year, citing domestic problems such as severe storms, cuts to federal benefits, an economically struggling customer base and international uncertainties such as currency fluctuations.

The company announced Thursday that profit in the fourth quarter, which included the pivotal holiday shopping season, was down 21 percent from the same period last year. Sales at U.S. stores open for at least a year were down 0.4 percent — its fourth consecutive negative number in that category — and traffic in U.S. locations declined 1.7 percent.

Excluding certain one-time costs, the company came in at the low end of its guidance. The company also said Thursday that it was seeing success at its small-format stores, and planned to roll out more locations. Walmart earlier this month announced plans to bring a new small-format grocery store to Lacey, making it the second Walmart in the city, fourth in Thurston County and sixth in the region.

In a call with reporters, William S. Simon, the chief executive of Walmart U.S., said that cuts to the federal Supplemental Nutrition Assistance Program, or food stamps, crimped the company’s results. An exceptionally ferocious winter with multiple storms also cut into earnings, Simon said, detracting from a positive performance during the six-week holiday shopping period. He said the storms “aren’t an excuse, but merely an explanation.”

Ken Perkins, founder of Retail Metrics, said the company’s central problem was the plight of its core consumers, who are still struggling with stagnant wages and have been left out of areas of economic growth, like rising stocks and home values.

Perkins also said that most of the higher-income consumers who went to Walmart during the height of the recession have mostly vanished from its aisles, and the company has had trouble making lasting inroads with those customers.

Staff writer Rolf Boone contributed to this report.

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