Walmart’s predictions for 2016 paint a bleak retail picture

Walmart bleak retail outlook

Walmart is not expecting any significant growth in 2016 (Fiscal 2017) and that’s bad news for the retail industry on a whole.

The company’s sales predictions have been falling in recent months. In October, the company said it expected growth of 3% to 4% every year for the next three years. On Thursday, the company backtracked, saying there was very little growth potential in fiscal 2017 (2016 calendar year).

“Including store closures and the impact of the strengthening U.S. dollar, we now expect net sales growth to be relatively flat in fiscal year 2017,” Walmart CFO Brett Biggs said in the company’s earnings call.

Walmart closed 269 stores in late January and laid off thousands of employees.

It’s not just Walmart feeling the shift in retail trends.

Conlumino CEO Neil Saunders wrote in a research note, “The blunt truth is that while stores remain a vital part of the retail mix, they are not quite as relevant as they used to be.”

“Walmart’s decision is part of a larger shift that will be played out across all parts of the retail sector over the coming year and beyond,” Saunders added.

Walmart’s predictions for the 2016 calendar year follow Macy’s announcement that it would close 40 stores in early 2016.

Mall traffic has also been on the decline. The average shopper now visits malls three to four times a year, instead of five to six times just several years ago, according to information from the Fung Business Intelligence Centre.

Malls are especially susceptible to a domino effect if an anchor store such as a Macy’s or Sears closes down.

Walmart hasn’t painted a fully bleak picture, the company announced that e-commerce sales increased 12% last year. The company plans to keep building its digital relationship with customers. That relationship will include more online items and an increase in grocery deliveries.

If Walmart continues to bolster its online presence, the company may shutter more traditional stores, creating a more bleak outlook for the retail industries traditional brick and mortar model.

Shares at Walmart are down 4.42% at 11:01 AM Central.

Walmart Shares down on bleak fiscal 2017 outlook