Walmart extends corruption inquiries
(Financial Times) -- Walmart revealed that its internal probe into potential violations of anti-corruption law had extended to Brazil, China and India as it reported quarterly sales growth short of expectations and profits that matched them.
The world's biggest retailer by sales said Thursday that investigations into allegations of bribes paid to secure new store permits in Mexico had been extended to three other emerging markets.
"Inquiries or investigations regarding allegations of potential [US anti-corruption law] violations have been commenced in a number of foreign markets where we operate, including but not limited to Brazil, China and India," Walmart said in a regulatory filing.
At the same time, Walmart reported sales that disappointed investors -- up 3.4 per cent from a year ago at $113.2bn but short of the consensus forecast of $114.9bn. Without currency effects, Walmart said, it would have hit the forecast.
However, signs of slowing momentum before the crucial end-of-year holiday shopping season sent Walmart shares down 3.6 per cent to $68.73.
The retailer reported net income up 9 per cent to $3.6bn, or $1.08 per share, in the three months to the end of October, matching Wall Street forecasts.
Charles Holley, chief financial officer, described the results as "very solid" and said: "We grew our income faster than our sales. That's very key for us."
Most investors have focused on Walmart's US growth and brushed off the corruption allegations since they became public in April, pushing the shares to new highs until mid-October, when they began to fall.
For the past quarter the retailer reported a 1.5 per cent rise in US sales at stores open at least a year -- a closely watched performance measure -- marking a second consecutive quarter of slowing growth.
Greg Melich, analyst at ISI Group, said in a research note that Walmart's US growth had slowed by more than that of Target -- a rival discount chain that also released results Thursday -- and by more than the retail sector at large. Target, whose stores are in the US and Canada, reported a bigger-than-expected rise in net profit to $637m and a 2.9 per cent rise in sales at US stores open at least a year.
"We'd expect [Walmart] to come under some pressure given [the company's] commentary that this holiday appears 'very competitive'," he said.
Mr Holley said customers were concerned about jobs and the costs of petrol and food. But Walmart was "very well prepared" for the holiday season with low prices and smaller pack sizes.
Walmart said that since it began a compliance review last year it had identified or been made aware of corruption allegations beyond those in Mexico.
It declined to comment on the allegations or on whether existing probes by the US Department of Justice and the Securities and Exchange Commission had expanded to cover them but said that it continued to co-operate with the authorities.
Walmart said it had spent $35m on improving its compliance programmes and added: "We will not tolerate non-compliance anywhere or at any level of the company."
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