Walmart Raising Workers’ Wages

As part of a strategy to invest in its people through changes in hiring, training, scheduling, store management structure and compensation, Wal-Mart Stores Inc. revealed that about 500,000 full- and part-time associates at Walmart U.S. stores and Sam's Clubs will receive pay increases during the first half of the current fiscal year.

Current and future associates can expect to benefit from the initiative, which will ensure that Walmart hourly associates earn at least $1.75 above the current federal minimum wage, or $9 per hour, in April. The next year, by Feb. 1, 2016, current associates will earn a minimum of $10 per hour.

"These changes will give our U.S. associates the opportunity to earn higher pay and advance in their careers," noted President and CEO Doug McMillon. "We're pursuing a comprehensive approach that is sustainable over the long term. By realigning our store operational structure, associates can enjoy a closer relationship with their supervisors. In addition, associates will have more control over their schedules. The investment in these initiatives is more than $1 billion for this fiscal year."

Walmart and the Walmart Foundation have also committed $100 million over five years to help increase the economic mobility of entry-level retail and service workers by advancing their careers.

Matthew Shay, president and CEO of the Washington, D.C.-based National Retail Federation, said that the company's decision to raise wages "is just another example of the power of the marketplace. Like many other retailers, Walmart made its decision based upon what is best for their employees, their customers, their shareholders and the communities in which they operate."

Added Shay: "Government mandates that arbitrarily require businesses to implement politically driven policy are unnecessary and, in fact, create hurdles to job creation, curtail capital investment and pose as barriers to a sustained economic recovery."

Walmart Financial Results

Additionally, Walmart reported consolidated net sales for the fourth quarter ended Jan. 31 of $130.7 billion, an increase of 1.4 percent over last year. The quarter included the negative impact of about $2.6 billion from currency exchange rate fluctuations. The mega-retailer's net sales grew 3.5 percent to $133.2 billion, while membership and other income dipped 0.5 percent. Total revenue was $131.6 billion, a rise of about $1.9 billion, or 1.4 percent.

The company's consolidated net sales for fiscal year 2015 were $482.2 billion, an increase of 1.9 percent over fiscal year 2014. Net sales included about $5.3 billion of negative impact from currency exchange rate fluctuations. Membership and other income rose 6.3 percent. Total revenue came to $485.7 billion, an increase of about $9.4 billion, or 2 percent. Constant currency revenue was nearly $491 billion.

"We had a good fourth quarter to close out our fiscal year, with underlying EPS of $1.61," noted McMillon. "Walmart U.S. delivered better-than-expected comp sales. Sam's Club had its best performance of the year, and Walmart International had solid sales and profitability. Like many other global companies, we faced significant headwinds from currency exchange-rate fluctuations, so I’m pleased that we delivered fiscal year revenue of $486 billion. But, we’re not satisfied.” He added that the company planned to invest “strategically to exceed [customers’] expectations and better position Walmart for the future,” including the aforementioned associate initiative, and would “continue to integrate our physical locations with a great e-commerce and mobile commerce business."

Comparative-store sales at Walmart U.S. stores grew 1.5 percent for Q4. Walmart U.S. President and CEO Greg Foran also noted the strong performance of Neighborhood Market stores, which "delivered approximately a 7.7 percent comp during the quarter. We opened 233 Neighborhood Markets during the year, and customers like their easy and convenient access to fresh foods, pharmacy and services."

Sam's Club comps, without fuel, rose 2 percent for the same 13-week period. “Throughout the year, we've seen meaningful acceleration culminating in comp sales, without fuel, of 2.0 percent for the 13-week period" of Q4, said Rosalind Brewer, Sam's Club president and CEO. "Strong holiday execution, combined with our strategic investments in member value, merchandise relevance and the integration of digital and physical boosted our performance." Sam's Club net sales, excluding fuel, came to $51.6 billion, a 2.1 percent increase over last year.

Walmart's e-commerce sales impact includes sales initiated through the company's websites and fulfilled through its dedicated e-commerce distribution facilities, in addition to an estimate for sales initiated online, but fulfilled through stores and clubs. For Q4, e-commerce sales positively impacted Walmart U.S. comp sales by about 30 basis points, and Sam's Club comps by about 40 basis points.

David Cheesewright, Walmart International president and CEO, said he was "pleased with our International performance, as we've remained committed to our strategic priorities. We’ve produced solid sales and operating income growth, despite operating in a challenging, competitive retail environment and with significant currency headwinds. Our teams continue to drive innovation in e-commerce by expanding our online presence and offering multiple ways for our customers to shop."

In fact, Walmart's e-commerce sales worldwide rose about 22 percent for the year, outpacing the market.

"Our investments started to enhance our customer experience during the fourth quarter across digital and physical, and we saw good sales in markets around the world," observed Neil Ashe, global e-commerce president and CEO. "We made great progress on our priorities, including our global technology platform, next-generation fulfillment network, and the integration of digital and physical. We have significant opportunities to grow, as our core capabilities continue rolling out to customers around the world, and we further expand mobile offerings and our fulfillment centers. Fiscal year 2016 will continue to be a building year, and we expect sales to grow globally in the mid-20s."

Walmart also issued a full fiscal 2016 EPS guidance range of $4.70 to $5.05, and a first-quarter forecast of $0.95 to $1.10. The guidance reflects the additional strategic wage and training investments for U.S. associates, as well as incremental investments for Global eCommerce initiatives, totaling between $0.26 and $0.29 per share.

For the 13-week period ending May 1, 2015, Walmart U.S. expects comp sales to increase between 1 percent and 2 percent, and Sam's Club expects comps, excluding fuel, to rise between 1 percent and 2 percent.

Bentonville, Ark.-based Walmart operates 11,453 stores under 71 banners in 27 countries, and e-commerce websites in 11 countries.