Wal-Mart warned that its moves to improve customer service would bite into its bottom line. Fred Katayama reports.
Earnings under pressure at yet another retailer. Wal-Mart warned that its moves to improve customer service will bite into its bottom line, prompting the U.S.' largest retailer to cut its earnings forecast for the year. It's increasing worker hours and wages. Also hurting the owner of Walmart and Sam's Club warehouse stores: the stronger dollar, higher-than-expected theft at its stores, and lower margins on its pharmacy business. Its archrival, Target, is existing that business. It wasn't all bad news. Revenue was flat, but more people shopped at its U.S. stores, and lower gas prices helped boost comparable sales for the fourth straight quarter. Telsey Advisory Group senior analyst Joseph Feldman said, "When you look at how the quarter shook out for product categories, they were all positive, positive traffic, and that's all great. I guess investment spending was a little bit heavier than we had anticipated." Wal-Mart's shares, down 16 percent this year, fell further in early trading.