Wal-Mart Stores Inc. suffered its worst stock decline in more than 27 years after predicting a drop in annual profit, underscoring the giant retailer’s struggles to reignite growth.
Earnings will decrease 6 percent to 12 percent in fiscal 2017, which ends in January of that year, the Bentonville, Arkansas-based company said at its investor day on Wednesday. Analysts had estimated a gain of 4 percent on average, according to data compiled by Bloomberg.
The outlook was “far worse than anyone expected,” Charles Grom, an analyst with Sterne Agee & Leach, said in a note to clients.
Wal-Mart has been pumping money into its workforce and e-commerce capabilities in a bid to reignite stagnant sales growth -- investments that will continue in fiscal 2017. The company raised its base employee wages to $9 an hour in April and plans to boost hourly pay to at least $10 next year. The effort, combined with an expanded training program, added about $1 billion in costs this year and $1.5 billion next year.