The Economy

eBay, Wal-Mart Lower Their Holiday Expectations

Both eBay and Wal-Mat cut their sales forecasts for their current fiscal year, in part blaming a stronger U.S. dollar.
Matthew HellerOctober 16, 2014
eBay, Wal-Mart Lower Their Holiday Expectations

Bellwether retailers eBay and Wal-Mart have reduced their expectations of sales growth for the current fiscal year, blaming the lower outlooks, in part, on the stronger dollar.

EBay lopped off $300 million, or 7 cents per share, from its annual revenue forecast for 2014, while Wal-Mart, which recorded $473.1 billion in sales in its last fiscal year, said it now expects sales to rise 2-3% in the year ending Jan. 31, 2015. It had previously estimated growth at the low end of a 3-5% range.

The retailers’ revised forecasts suggest that the all-important holiday season “may turn out to be weaker than some analysts predicted as recently as last week,” Reuters reports.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

EBay cut its fourth-quarter revenue outlook by $120 million, reflecting the strength of the dollar against the British pound, the euro and the Australian dollar, which, according to Reuters, together account for 35% of eBay’s volume.

The National Retail Federation predicted last week that strengthening consumer confidence would trigger a “healthy” 4.1% increase in November and December retail sales, outpacing the 3.1% spike seen in the same period of 2013.

“Retailers could see a welcome boost in holiday shopping, giving some companies the shot in the arm they need after a volatile first half of the year and an uneventful summer,” NRF chief executive Matthew Shay said in a news release.

But he also warned that “there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions. The lagging economic recovery, though improving, is still top of mind for many Americans.”

Two-thirds of Americans are limiting how much they spend each month, in large part due to stagnant income, according to a report released this week.

Wal-Mart also said Wednesday it would slow store openings in the next fiscal year while investing more heavily in e-commerce. It expects e-commerce sales to grow 25% in fiscal 2016.

“We are focused on creating an endless aisle and appealing to our customers’ changing needs,” CFO Charles Holley said in a news release.

Source: Reuters eBay, Wal-Mart warnings stir holiday sales concerns