NEW YORK (AP) — Much like its low-income shoppers, Wal-Mart can't seem to catch a break in as the U.S. economy rebounds.
The world's largest retailer on Thursday posted a 21 percent drop in fourth quarter profit and gave a subdued forecast for the current quarter as it continues to be weighed down by a number of factors.
Winter has been marked by severe weather and slow spending over the holidays. Growing competition from dollar stores and grocers also has chipped away sales. And the latest headache? Wal-Mart said the Nov. 1 expiration of a temporary boost in food stamps is hurting its shoppers' ability to spend.
The issues Wal-Mart Stores Inc. faces are big challenges for Doug McMillon, who took over as CEO on Feb. 1. In a pre-recorded call on Thursday, McMillon promised Wal-Mart will sharpen its focus on everyday low prices at U.S. stores and push that strategy abroad.
Wal-Mart also said it will speed up growth plans for its Neighborhood Markets and Wal-Mart Express smaller stores that cater to shoppers looking for more convenience with fresh produce, meat and household and beauty products.
It now plans to open 270 to 300 small stores during the current fiscal year — double its initial forecast — adding to the 346 Neighborhood Markets and 20 Wal-Mart Express locations it already has. The expansion of smaller stores now outpaces the growth of its supercenters, which had long been the company's growth engine.
"Customers' shopping habits are changing more rapidly than ever before," McMillon said. "We must be more nimble and flexible."
Wal-Mart's results give insight into shopper behavior during the U.S. economic recovery. It's considered an economic bellwether because it accounts for nearly 10 percent of nonautomotive retail spending in the U.S. Wal-Mart, like other retailers, warned in late January that its profit and sales were hurt by a number of factors.
The holiday shopping season was brutally competitive in November and December. During those months, the busiest shopping period of the year, Wal-Mart had to slash prices to get customers to spend.
On top of that, the company said revenue at stores open at least a year fell in the first two weeks of February because of severe weather. It said that at the height of winter storms, it had more than 200 stores closed.