Deutsche Bank Analyst: Wal-Mart's Minimum Wage Increase Is Actually A Good Thing

Retail giant Wal-Mart Stores, Inc. WMT declared its fourth-quarter earnings and earnings guidance for fiscal ’15 earlier today. The company reported fourth quarter EPS of $1.61, above analysts’ expectations of $1.53. However, the revenues of $131.6 billion came slightly lower than expectations of $132.2 billion.

Wal-Mart also announced that it will be raising minimum wage of full-time and part-time workers to $9/hour starting this April and will increase it further to $10/hour by February 2016. Paul Trussell, Deutsche Bank analyst, was on CNBC Thursday to weigh in on Wal-Mart’s results and wage increase.

Weak Guidance

“The Earnings guidance for the upcoming year is a bit light,” Trussell said. “Certainly we have to find out how much of that is maybe FX and currency pressure or other margin headwinds such as healthcare and then investing back in labor, which is something that has been ongoing now for the past few quarters, but also take a step back and look at the US comps up 1.2p and frankly that’s the best sales growth we have had out of the U.S. business in a few years.”

What Do You Think About Increase In The Minimum Wage?

“I think it actually is good news,” Trussell replied. “I mean, frankly part of Wal-Mart’s problem has been concerns around inventories being out of stock, then about bad customer service, long lines at the checkout counters, there’s been a lot of disgruntled workers and frankly this does sound like the new CEO both at the U.S. Wal-Mart team and Doug McMillan at the helm are taking the step to kind of correct perhaps some of those past evils”