Wal-Mart Stores Inc announced on Thursday that it would increase the pay rate of its US staff above the minimum amid rebounding sales at home.
The worlds biggest retailer said it would spend more than $1 billion on wage increases during this fiscal year. The company intents to start paying its employees at least $9.00 per hour by April, or $1.75 above todays federal minimum wage.
By February 2016 associates would be receiving at least $10.00 per hour. The company said around 500 000 full-time and part-time staffer employed at Wal-Mart and Sams Clubs would be affected by the change.
The new practice will affect current and future employees, Wal-Mart said. The figure represents around a third of the companys 1.4 million staffers located in the US.
The company also released its financial figures for the latest three months, during which same-store US sales marked their second consecutive quarter of gains.
Net sales in the US for the three months ended January 31 stood at $79.57 billion, up 4.1% compared to last year. Overall revenue for the quarter edged up 1.4% to $130.65 billion from $128.78 billion.
Sams Club contributed a small portion of the total revenue, but still managed to achieve an increase in net sales of 1.3% to $14.87 billion. However, the company said that lower gasoline prices capped gains from Sam’s Club, which also sales car fuel alongside jewelry and electronics. Same-store sales at the wholesaler dropped 0.4%, excluding the impact of gasoline prices comparable sales edged up 2%.
Wal-Mart projected to deliver per-share earnings of between $4.70 and $5.05 in the fiscal 2016, including profit of $0.95 to $1.10 a share in the first quarter. In comparison analysts surveyed by Thomson Reuters had estimated full-year earnings of $5.19 a share.
However, the company warned that net sales could be dented by as much as $10 billion if foreign-exchange rates remain where they are now. As a result of that estimate, Wal-Mart projected its sales to grow between 1% and 2% in the fiscal year, down from its October forecast of 2% to 4% increase.
“Given the investments were making in our worldwide e-commerce initiatives and in our associates through higher wages and training, we expect operating income to be pressured in fiscal 2016,” said Chief Financial Officer Charles Holley.
Wal-Mart gained 0.38% on Wednesday and closed at $86.29 in New York. On Thursday the stock fell 2.59% to $84.06 at 16:02 GMT, marking a one-year increase of 11.93%. The company is valued at $278.13 billion.
According to the Financial Times, the 23 analysts offering 12-month price targets for Wal-Mart have a median target of $87.00, with a high estimate of $100.00 and a low estimate of $66.00. The median estimate represents a 0.82% increase from the last closing price.
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