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Wal-Mart warning slams stock

Wednesday, October 14, 2015 - 01:09

Wal-Mart shares get whacked after the company warned profits would fall in the next fiscal year. Bobbi Rebell reports.

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Wal-Mart's spending pattern not going over well with investors. The stock suffering its worst day in more than 17 years after the world's biggest retailer warned earnings per share would fall as much as 12 percent in the next fiscal year. The reason? It is spending more money to invest in technology and boost pay for its workers. Wal-Mart will also be lowering prices over the next three years. WSL Strategic Retail's Wendy Liebmann: SOUNDBITE: WENDY LIEBMANN, CEO, WSL STRATEGIC RETAIL (ENGLISH) SAYING: "Where they are spending their money shouldn't have caught people off guard because they have said it before. They have to do it. They have to invest in the future, and it is what they are doing. What caught them off guard, I think, is the fact that the impact is not driving sales at this moment and that makes everyone nervous. " But Liebmann says Wal-Mart has no choice. It faces tough competition from online retailers, led by Amazon. And dollar stores and supermarkets are fighting for a piece of its grocery business, which accounts for more than half of its U.S. sales. Also hitting Wal-Mart hard, the strong dollar, which has been a challenge for other retailers as well. Wal-Mart now plans to open fewer new stores, and it predicts fiscal year sales this year will be flat.

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Wal-Mart warning slams stock

Wednesday, October 14, 2015 - 01:09