Wal-Mart had a solid fourth quarter, but confirmed the fears that payroll taxes and higher gas prices have been weighing on the retailer since the start of the year.
“In the last couple of weeks of the quarter, we began to see an impact from the increase in payroll taxes and the delay in the income tax refunds,” said Wal-Mart chief executive officer Bill Simon.
Simon added that February sales for the nation’s largest retailer were slower than planned, as well.
Speculation about a slowdown started buzzing last week, when leaked emails from Wal-Mart executives who called the month a “total disaster” surfaced.
Wal-Mart is viewed as a key gauge of consumer sentiment. So concerns about the payroll tax hike hitting spending could weigh on other retailers as well. However, many retailers posted healthy sales in January, a sign that consumers may not be worried about higher taxes and a still stagnant economy just yet.
But the sluggish start to the year comes after a decent fourth quarter, which was bolstered by steady sales during the holiday season.
Wal-Mart said earnings rose 7.9% from a year ago to $5.6 billion, or $1.67 a share. That beat Wall Street’s estimates of a profit of $1.57 a share, according to a survey of analysts by Thomson Reuters.
Revenue came in just slightly below expectations though. The company reported a 3.9% increase in total revenue to $127.9 billion. Analysts were forecasting $128 billion.
Wal-Mart also announced it would increase its annual dividend by $0.29 to $1.88 per share for fiscal 2014, an 18% increase over last year.
Simon said that the company did well on Black Friday and throughout the holiday season. Sales of toys and food were particularly strong.
“Our performance during the key holidays was solid,” he said.
Shares of the company were slightly higher in premarket trading.
