Wal-Mart Stores Inc (NYSE:WMT) Facing Tough Competition with Amazon.Com Inc (NASDAQ: AMZN) – Cuts Down the Guidance Outlook of 2014 Due To Increase Costs

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By Stefan Larson on August 15, 2014 Company, Consumer Staples

According to the latest news, Wal-Mart Stores Inc (NYSE:WMT) recently cut down its guidance outlook for the current year on the basis of increased healthcare costs of the employees and investments in the online retail business of the company.

Wal-Mart Stores Inc (NYSE:WMT), the biggest retailer company in the world, has around 1.4 million employees in the region of United States. The company increased its costs of healthcare from $330 million to $500 million.

Wal-Mart Stores Inc (NYSE:WMT) said that the healthcare expenses increased over the second fiscal quarter of 2014 due to an increase in the medical costs as well as an increases in the enrollments.

For the second quarter, the company reported flat sales from its same-store segment, excluding the fuel costs. This is the sixth quarter in a row that the company has reported negative or zero growth.

Doug McMillion, the chief executive officer of the company said that the sales of the company were on a decline due to a reduction in customer spending. The company also said that its numbers were running a little low due to the intense competition that it was facing with its rival companies.

According to a 2014 report on retail business, the retail sales in the region of United States were the lowest in the month of July since the month of January. Kohl’s Corporation, an operator of the department store, reported its financial reports on August 13, 2014. The company said that its sales dropped by 1.3 percent during the most recent quarter.

It is pertinent to note here that the retail business is dominated by Amazon.com Inc as more and more customers are turning to web to shop their everyday use products, and Wal-Mart Stores Inc (NYSE:WMT) is merely catching up with it.

The company, in an attempt to accelerate its online business, named a new online business’ head in June.

Wal-Mart Stores Inc (NYSE:WMT) saw an increase of 2.8 percent in its revenues, mainly due to a boost in its smaller store sales.

The CEO of the company said that Wal-Mart Stores Inc (NYSE:WMT) is confident that its sales from e-commerce and small store will rise even further in the near future, and that is why the company is investing in these segments of the business.

The company lowered its earnings outlook from a range of $5.10 to $5.45 to a range of $4.90 to $5.15.

Coming to the net income of the company, it surged to $4.09 billion from a previously held net income of $4.07 billion. The company’s earnings of $1.21 were in line with the estimates of Thomson. Coming to the revenues of the company, the total revenues increased from $116.83 billion to $120.13 billion over a period of one year.

Wal-Mart Stores Inc (NYSE:WMT), on the last trading day, August 14, 2014, started its stocks at a price of $73.89 and closed at a price of $74.39, after hitting the highest figures of $74.43. The company has a market capitalization of 238.64 billion with a price to earnings ratio of 15.44.