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Walmart Warns Sales Below Expectations

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Walmart issued a warning that its U.S. sales in the last quarter declined and that, as a result, its profitability is likely down as well. The retailer reported that its like-for-like sales were “slightly negative,” falling below already modest expectations.

According to a statement released by Walmart, it enjoyed a robust holiday shopping season but wintry weather and a significant reduction in the U.S. government’s food stamp program both took their toll on its performance for the three months leading up to the end of January.

Previously, Walmart forecast that its earnings per share for the quarter would between $1.60 and $1.70, and now it expects its performance to be “at or slightly below” that range.

Walmart’s recent sluggishness sharply contrasts with its ambitions plans to grow in the next five years, and to move more aggressively into the apparel sector. Walmart has been crafting a comprehensive strategy for apparel merchandise as part of its vision for overall growth over the next five years. Planning to add an additional $500 million in apparel sales over the next year, the retail leviathan will be pushing brands like Ben Hogan, Russell, And-1 and Avia. According to chief merchandising officer Duncan McNaughton, Walmart intends to offer an assorted basket of products that will roughly include 50 percent basic apparel, 40 percent fashion and 10 percent new, exclusively carried brands.

The move into apparel sales is part and parcel of Walmart’s ambitious growth projections for the next several years. Their eye-popping goal for 2016: $500 billion in sales, or about one-half of what JC Penney borrowed this year to shore up its capital reserves.

The capital spending for Walmart in 2015 will be aggressive, with plans to drop $11.8 billion to $12.8 billion. In addition to apparel, the company will emphasize improved technology, e-commerce and omnichannel capabilities and small-store renovations.

On the news of Walmart’s downwardly revised sales expectations, its shares dipped 0.9% in premarket trading today, January 31.

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