Wal-Mart hikes workers' wages

by Monica Watrous
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BENTONVILLE, ARK. — Wal-Mart’s latest strategy for sales growth includes higher pay for hourly workers. The retail giant on Feb. 19 announced comprehensive changes to its hiring, training, compensation and scheduling programs and store management structure for hourly associates in Wal-Mart U.S. stores and Sam’s Club stores. Wal-Mart and the Wal-Mart Foundation have committed to investing $100 million over five years in career advancement opportunities for entry-level workers.

“Approximately 500,000 full-time and part-time associates at Wal-Mart U.S. stores and Sam’s Clubs will receive pay raises in the first half of the current fiscal year,” said Doug McMillon, president and chief executive officer of Wal-Mart Stores, Inc., during a Feb. 19 earnings call with financial analysts to discuss fiscal 2015 performance. “Current and future associates will benefit from this initiative, which ensures that Wal-Mart hourly associates earn at least $1.75 above today’s federal minimum wage of $9 per hour in April. The following year by Feb. 1, 2016, current associates will earn at least $10 per hour…

“As a result, we firmly believe that our customers will benefit from a better store experience, which can drive higher sales and returns for our shareholders over time.”

Income from continuing operations in the fourth quarter ended Jan. 31 was $4,966 million, equal to $1.54 per share on the common stock, up 14% from $4,354 million, or $1.35 per share, for the prior-year period. Revenues for the quarter totaled $131,565 million, up 1.4% from $129,706 million.

For the full year, income from continuing operations attributable to Wal-Mart was $16,182 million, equal to $5.01 per share, up 1.7% from $15,918 million, or $4.87 per share, for fiscal 2014. Revenues for the year advanced 2% to $485,651 million, which compared with $476,294 million for the prior year.

E-commerce sales globally increased 22% for the year, outpacing the market.

“Solid, but not quite as strong as we wanted,” Mr. McMillon said. “We are striving to balance sales growth and profitability. We are being thoughtful with our investments, ensuring we have the infrastructure in place to build this business for the long term. I’m excited about the possibilities that are in front of us.”

With nearly 70% of Walmart.com traffic in the United States on phones and tablets during the holidays, executives said the company is well-positioned to provide a strong mobile platform for customers this year and beyond.

“And this isn’t just a U.S. trend,” Mr. McMillon noted. “For example, traffic from the mobile app in Brazil nearly tripled on the Black Friday holiday.”

Operating income for Wal-Mart U.S. fell 0.6% to $6,177 million for the quarter and 2.1% to $21,336 million for the year but delivered better-than-expected comparable sales growth of 1.5% for the quarter and 0.5% for the year. Net sales for the segment grew 4.1% over the year-ago quarter, driven by higher traffic.

“Wal-Mart U.S. improved its sales and operating income trends each consecutive quarter during fiscal 2015,” Mr. McMillon said. “Fourth-quarter comp sales were the strongest in more than two years, with positive traffic for the first time in nine quarters.

“Our Neighborhood Markets have continued to deliver strong comps. Our emphasis remains on the quality of the stores that we open, not the quantity.”

Wal-Mart expanded its grocery delivery and pickup tests to include the entire Denver market and launched grocery pickup in Northwest Arkansas. Looking ahead, the retailer plans to expand the on-line grocery service to select locations in Phoenix and Huntsville, Alabama.

Sam’s Club delivered a solid year with membership income up over 10% and comparable sales growth up 0.5% for the year, excluding fuel. Operating income grew at a greater rate than sales. Since doubling its organic portfolio from the previous quarter, the company recorded low-single-digit comparable sales growth in dry grocery and beverage departments. Sales of fresh food grew low single digits during the quarter, led by a strong value propositions for meat products.

Looking ahead to fiscal 2016, Wal-Mart management expects first-quarter earnings per share to range between 95c and $1.10, compared with $1.10 the year before, and full-year earnings per share to range between $4.70 and $5.05, compared to reported earnings per share of $4.99 in fiscal 2015. In addition to incremental investments in global e-commerce initiatives and the new wage structure, executives anticipate ongoing headwinds from currency exchange rates and economic conditions in various markets.

“Retail is changing so quickly that we must move with greater urgency to stay out in front,” Mr. McMillon said. “We are thinking differently about retail and about the world. This drives our approach to global responsibility in areas like environmental sustainability, women's economic empowerment, and offering healthy food choices. It is important work and it matters to our customers and shareholders.”
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