Walmart’s Stock Gets Hammered As Sales Projections Dip

Wednesday was a rough day for Walmart’s executive team — and for shareholders.

Walmart held its investor day yesterday (Oct. 14) and gave some insights into its slumping sales projections. But the biggest headlines that came out of the investor day were about the shares tumble of more than $6, which was its largest single-day price decline.

While Walmart works to ramp up its eCommerce efforts, the company — like most big box retailers — has struggled to keep consumers stepping foot in stores. Walmart indicated that it’s increased its spending to focus on its digital initiatives, which should continue for the next few years. The retailer will pump $2 billion into its online sales efforts.

During its investor day, Walmart also said it plans to buy back $20 billion worth of its own shares and will also increase tech spending, which could impact earnings for the next fiscal year. That news, however, didn’t go well for Walmart on the Street as its shares dipped $6.70, a 10 percent drop.

“Fiscal year 2017 will represent our heaviest investment period,” CFO Charles Holley said in a statement. “Operating income is expected to be impacted by approximately $1.5 billion from the second phase of our previously announced investments in wages and training, as well as our commitment to further developing a seamless customer experience.”

CEO Doug McMillon also noted Walmart’s investment in wages and labor, saying that: “Seventy-five percent of next year’s investment will be related to people.”

In terms of sales, Walmart forecasted sales growth of 3–4 percent over the next three years, but sales are anticipated to be flat in fiscal 2016. Meanwhile, Walmart’s focus will be on improving customer experiences in stores and enhancing its supply chain capabilities in order to lower costs. This means investing more in its digital offerings, including mobile.

“Having a supply chain that is connected and more dynamic will help us take out costs,” McMillon said. “And it’s not just transportation and handling. It’s also markdowns.”

Walmart executives also touched on its omnichannel efforts, which include its curbside grocery pickup service, which the company announced was expanding into 10 new markets, bringing its total to 23 markets. There are also plans in the works to expand the program to 20 more markets in 2016. And to up its buy online, pick up in store and online shopping channel abilities, Walmart will also be creating more warehouses to manage eCommerce.

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