Wal-Mart shares plunged as much as 10 percent after the news, touching a three-year low and on pace for their worst day in 15 years. The company lost more than $20 billion in market cap at its lows of the day. More than 30 million shares were traded before noon ET, almost quadruple the stock's 30-day volume average of 8.4 million shares.
Wal-Mart pinned the rise in expenses mostly on recent wage hikes, which it said will increase costs by $1.2 billion this year. The retailer expects earnings per share to decline by 6 to 12 percent next fiscal year, driven by pay increases and other investment.
Employees deserve the wage hikes announced earlier this year, but Wal-Mart may not have been clear enough in outlining the costs, CEO Doug McMillon said at an analyst event Wednesday. He said he still believes it was "the right decision to make," despite the market reaction to earnings guidance.
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The retailer noted that it would funnel about $1.1 billion next year into e-commerce and digital platforms. The investment boost comes as Wal-Mart tries to combat sluggish sales.
"What's clear is [Wal-Mart is] embracing digital investments to become more and more seamless in omnichannel; this is the right thing to do for the very long term, in our view, but again it contributes to lower operating profit dollar confidence for the next few years," financial services firm Stifel Nicolaus said in a research note.
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Wal-Mart anticipates an earnings recovery by fiscal year 2019, when it projects profit will climb 5 to 10 percent from the previous year. Net sales are expected to grow 3 to 4 percent annually over the next three years, the company said.
Wal-Mart's market cap losses Wednesday topped the market value of retailer Macy's and was roughly equal to the value of Kohl's and Ralph Lauren combined.
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— Reuters contributed to this report