Walmart and Q4 earnings

Walmart shares fell on Thursday after the company reported lower revenues and profits than analysts' estimates, and gave a forecast of lower sales and profits due to rising wages and capital expenditure on the e-commerce channel.

Shares in Walmart (WMT), up 23% over the past 12 months, fell sharply 5.9% on Thursday before trading opened as investors reacted negatively to forecasts of lower sales and profits in fiscal 2022 and the company's plans to increase payrolls and capital spending.

Walmart's Q4

Walmart reported Q4 earnings per share of $1.39, $0.12 worse than analysts' estimate of $1.51. However, its total net loss for the quarter was about $2.09bn, compared with a profit of $4.14bn a year earlier.

The world's largest retailer said it spent $1.1 billion on costs related to the COVID-19 pandemic during the past quarter.

Revenue rose 7% from a year ago to $152.1bn, also below the average analyst forecast of $148.47bn.

Sales at shops open for at least a year in the US were up 8.6%. Total electronic sales grew 69%, exceeding growth of 35% a year earlier, but slower than the 79% increase in the third quarter.

Dividends and buyback of Walmart shares Walmart's management also said on Thursday that it had approved a $20bn share buyback programme for its shares.

Walmart said it will raise its annual dividend by 2% to $2.20.

Company forecasts

After a year of record sales in a closed restaurant and bar environment and a surge in online sales by quarantined consumers, Walmart expects a return to more normal business models in calendar year 2021.

Walmart CEO Doug McMillon has promised that from 13 March the company will raise salaries for 425,000 employees (out of almost 1.5 million) from the digital sales and warehouse segments to $13-$19 per hour, depending on location and market. Walmart currently pays an hourly minimum wage of $11, which will now be at least $15.25 per hour.

The company plans to spend $14 billion on capital expenditure this fiscal year, investing in supply chain, automation and ways to improve the customer experience.

Walmart executives also noted that the company could get a boost if the U.S. government approves a new round of stimulus material payments for the pandemic.