Walmart Profits Down Due to Wage Increase, Strong U.S. Dollar
WASHINGTON, May 19 (UPI) — Walmart ‘s first-quarter earnings missed Wall Street’s forecast partly due to a recent wage increase for employees and a stronger U.S. dollar.
The massive retail company reported revenue of $114 billion, down 0.1 percent from last year, and income of $3.34 billion, down from $3.59 billion.
Shares were reported at $1.03 each, down from $1.11 a share last year. Analysts expected earnings of $1.05 a share.
According to Walmart, operating income fell because of its investment in wage increases for employees and the negative impact of currency exchange rate fluctuations by a stronger U.S. dollar.
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Walmart announced in February it would give raises to about 500,000 employees, bringing hourly wages above the federal wage minimum to $9 an hour, starting in April, and by Feb. 1, 2016, current employees will earn at least $10 an hour.
Walmart Chief Financial Officer Charles Holley said wage increases for employees will help increase sales in the long term because employees will buy Walmart products.
Lower food prices decreased the company’s earnings, as did product comparisons to last year, such as for home entertainment.
“We didn’t have anything like ‘Frozen’ this year,” Holley said to CNN Money, referring to the popular Disney movie released on DVD in March 2014.
Walmart Treasurer Claire Babineaux-Fontenot said currency exchange affected the company, leading to international revenue dropping by 6.6 percent.
“Currency exchange rate fluctuations had a greater than anticipated impact on this year’s first quarter results,” Babineaux-Fontenot said to USA Today. “Fluctuations in currency negatively impacted net sales by approximately $3.3 billion, and similarly impacted [earnings per share] by $0.03.”
