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Bad weather hurts Wal-Mart in 1Q, outlook weak

By WTOP Staff

MAE ANDERSON
AP Retail Writer

NEW YORK (AP) — Wal-Mart’s first-quarter net income fell 5 percent as bad winter weather and financial struggles kept customers from spending at the world’s largest retailer.

The company’s shares fell nearly 2 percent as Wal-Mart reported results that missed Wall Street’s expectations for the third time in five quarters and gave a weak second-quarter earnings forecast.

The results underscore the big challenges facing Wal-Mart’s new CEO, Doug McMillon, who took over the top role on Feb. 1. The retailer is considered an economic bellwether, with the company accounting for nearly 10 percent of nonautomotive retail spending in the U.S.

Wal-Mart’s latest performance appears to show that many people are having a hard time stretching their money between paychecks.

For the period ended April 30, the Bentonville, Arkansas, company earned $3.59 billion, or $1.11 per share. That compares with $3.78 billion, or $1.14 per share, a year ago.

Wal-Mart Stores Inc. said that bad weather hurt earnings by about 3 cents per share. Its performance was also dinged by a higher-than-expected tax rate.

Income from continuing operations was $1.10 per share. Analysts, on average, expected earnings of $1.15 per share, according to a FactSet survey.

“Like other retailers in the United States, the unseasonably cold and disruptive weather negatively impacted U.S. sales and drove operating expenses higher than expected,” McMillon said in a statement.

Not only did weather affect store traffic, it disrupted the supply chain, slowing production and backing up trucking transportation around the country, the company said.

But Wal-Mart has been suffering from weak sales in the U.S. for some time. Sales at U.S. stores open at least a year dipped 0.2 percent in the quarter, the fifth consecutive quarter of decline the metric, considered a key gauge of a retailer’s financial performance. Analysts had been expecting the measure to be flat.

In the U.S., while jobs are easier to get and the housing market is gaining momentum, these improvements have not been enough to get Americans to spend. On top of that, the Nov. 1 expiration of a temporary boost in food stamps is hurting its shoppers’ ability to spend.

“Traffic continues to be negative, despite investments in price, TV marketing, and social marketing,” said Belus Capital Advisors analyst Brian Sozzi. “Walmart’s traffic troubles are part related to weather in the first quarter, but also very reflective in how people are now shopping (online) and the company not being able to full play in that trend.”

Total revenue rose 1 percent to $114.96 billion. Wall Street was calling for higher revenue of $116.43 billion.

The stronger dollar hurt revenue by about $1.6 billion. Excluding that, revenue would have risen 2 percent.

McMillon said in a prerecorded call that U.S. sales rose during the second half of the quarter, but that Sam’s Club had lower-than-expected sales. While membership income climbed, McMillon said it was mostly because of a fee increase started last year.

Total U.S. revenue rose 2 percent to $67.85 billion. Wal-Mart International’s sales rose 3.4 percent in the quarter, on a constant currency basis.

Wal-Mart, which has 10,994 stores in 27 countries, is facing stiff completion from dollar chains and online king Amazon.com.

Wal-Mart has been sharpening its focus on everyday low prices at U.S. stores and further pushing that strategy abroad. Wal-Mart also said earlier in the year that it will speed up growth plans for its smaller Neighborhood Markets and Wal-Mart Express stores that cater to shoppers looking for more convenience with fresh produce and meat and household and beauty products.

In a call with the media, Wal-Mart executives said super centers are getting bigger purchases on each trip from people stocking up on bulk items, but traffic has been weaker, particularly in the bottom performing 10 percent of its stores.

At Neighborhood Markets, on the other hand, traffic is up 4 percent as people buy fill-in items at the smaller stores.

For the second quarter, Wal-Mart anticipates earnings from continuing operations in a range of $1.15 to $1.25 per share. Analysts predict earnings of $1.28 per share.

The company’s shares fell $1.88, or nearly 2 percent, to $76.85 in premarket trading just before the market opened.

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AP Business Writer Michelle Chapman contributed to this report.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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