Dive Brief:

• The strong dollar and customers holding on to their gas savings weighed on Wal-Mart Stores earnings this quarter, pushing an expected earnings per share of $1.05 to $1.03, and expected revenues of $116.23 to $114.88 billion.

• Same-store sales rose 1.1%, just within the retailer’s own forecast of 1% to 2%, but missing analyst expectations of 1.5%.

• The retailer announced earlier this year that it would raise the pay of many of its hourly workers; that added cost plus the strong dollar hit operating income, the company said. 

Dive Insight:

Wal-Mart is making a lot of investments to bump up its e-commerce game and join in on some of the more agile logistics that have benefited other retail companies. Most recently, the company said it was testing a $50-a-year free-shipping membership that would take on Amazon and newcomer Jet, which is in the midst of a soft launch.

That will be interesting to watch — it’s not clear that Wal-Mart has the wiggle room or motivation to cut prices to the bone the way Jet has promised for its own $50-a-year membership. And Amazon’s Prime membership, priced at a doubled $99 per year, has well more than double the added perks — including a premium entertainment streaming service, music streaming, data storage, and more — that almost make a bare-bones membership model like Wal-Mart’s or Jet’s a different animal.

Unlike most retailers, Wal-Mart does appear to be benefiting from lower gas prices, perhaps because of its customers’ lower-to-middle average income. For the most part, economists have found that consumers are mostly pocketing any change from their gas savings. 

What may be a silver lining for Wal-Mart is the performance of its Neighborhood Market stores, with same-store sales up 7.9%. These stores will become crucial for the retailer as it begins to expand and improve its grocery business, as many Neighborhood Market locations emphasize their grocery offerings.