Walmart lowers profit outlook with the purchase of Flipkart; shares down

(Reuters) – Walmart Inc. (WMT.NTuesday lowered its earnings guidance for the year and said its online business growth next year would be slower than the current year ending in January, leading to a decline in its trading shares. before marketing.

Walmart's profit next year will be eroded by the acquisition of the Indian e-commerce company Flipkart in May for $ 16 billion, its largest transaction to date, in order to compete with Amazon.com Inc. (AMZN.O) in a fast-growing market.

The decline in earnings and online sales forecasts comes after Walmart recorded its best quarterly growth in the United States in a decade in August, in the wake of lower unemployment and tax cuts that boosted the power to spend consumers and the prospect of sales and profits in a full year.

Walmart is now expecting to earn between $ 4.65 and $ 4.80 per share for the 2019 fiscal year compared to an earlier forecast of 4.90 to $ 5.05 per share.

Shares fell 0.6% to $ 93.25 in trading before the sale, after falling more than 2% previously.

Walmart also expects a slower 35% growth rate for its online businesses in the year ending January 2020, compared to the 40% growth forecast for the current year.

Investors have been frightened in the past by the slowing growth in Walmart's US e-commerce business. The company has made several efforts over the last year to increase online traffic. These include a redesign of the website, more online grocery offerings and the acquisition of fashion brands to enhance its appeal to millennial buyers, who have generally avoided shopping on the Web sites. retailers.

The retailer recently embarked on an acquisition adventure in the US online fashion market, buying the online lingerie shop Bare Necessities last week after buying the plus-size clothing startup Eloquii a week ago .

Over the years, Walmart has sought to use physical locations as distribution points for online orders for groceries and other products, to build loyalty among buyers who increasingly expect an expedition fast and economical.

For fiscal year 2020, Walmart said it expects comparable revenue growth of 2.5% to 3% and a decline in its profits by a lower percentage than a figure compared to the 2019 fiscal year thanks to Flipkart.

The retailer will address investors at its headquarters in Bentonville, Arkansas, from 9:00 am ET (1:00 pm GMT).