NEW YORK (AP) - Wal-Mart expects its profit to take a hit as the world's biggest retailer works to fend off intensifying competition by perking up customer service and adapting to changing shopping habits.
The company that is known for its low prices and sprawling supercenters also forecast sales for its full fiscal year to be flat, hurt by unfavorable currency exchange rates. Wal-Mart had previously forecast sales growth of 1 to 2 percent. For its next fiscal year, it said profit could fall by as much as 12 percent.
Its shares tumbled nearly 9 percent to $60.83, which put them on track for their steepest one-day fall in more than 15 years.
The disappointing guidance comes as Wal-Mart Stores Inc. works to fix its U.S. business amid pressure from rivals including traditional grocers, dollar stores and Amazon.com. At its annual meeting in New York City Wednesday, CEO Doug McMillon sought to reassure investors the company is transforming to keep up with a rapidly changing retail landscape.
"We all know that retail has changed and will continue to change at an accelerating pace," said McMillon, who took the job in February 2014.
Under McMillon, Wal-Mart has accelerated the openings of smaller stores, which tend to be more conveniently located and let customers get in and out faster. The company is also stepping up its e-commerce efforts. On Wednesday, it said it was expanding its online grocery with free pickup to 10 additional markets, making the service available in a total of 20 markets in the U.S.
Such moves, along with a push to improve the cleanliness of its U.S. stores, are expected to help attract more higher-income customers than in the past, McMillon said. But he noted the company would also remain focused on shoppers who are driven by value.