Dive Brief:

• Wal-Mart Stores Inc. Thursday reported that U.S. same-store sales in its fourth quarter were up 0.6%, the sixth straight quarter of growth and the fifth straight quarter of increased traffic. The number missed market expectations for a 1% growth, according to CNBC. 

• The retailer also lowered its annual sales forecast, saying it expects net sales to be unchanged, compared to a previous forecast of 3-4% growth. 

• Total revenue was $129.7 billion for the quarter, and on a constant currency basis total revenue was $134.4 billion, an increase of 2.2%. Net income fell 7.9% to $4.57 billion from a year earlier. 

• Wal-Mart's stock slid on the news, with shares falling as much as 5% in pre-market trading. 

Dive Insight:

Wal-Mart is in the midst of a pivot, closing stores, improving stores, improving employee wages and working conditions, and spending billions on technology.

The company noted these investments in its earnings, by way of explanation for its 11.2% decrease in operating income for fiscal year 2016. But its e-commerce sales rose only 8%, a troubling number when compared to Amazon's 22% sales growth in its fourth quarter. 

Wal-Mart is chasing a more urban and more affluent customer and is playing catch-up in an economic and political landscape that demands better pay and working conditions for retail employees. The retailer this week unveiled new ways its managers will schedule its store employees, making it easier on workers, which will be in place by the end of the year.  

The changes, which the company has piloted for two years, have helped the retailer stem absenteeism and turnover. Worker advocates, who have pushed for better wages and scheduling, say that the retailer must also give workers more opportunities to work more hours in order to make a living.

The retailer said that “customer experience scores continued to strengthen” in the quarter, perhaps helped by its investments in its workforce and stores' appearance. Wal-Mart made improvements to both its supply chain and stores recently in an effort to combat empty and disorderly shelves that customers had complained about in the past. 

All of these changes are hitting the bottom line in the short term. It’s unclear though, how much impact they have in the long term. There may have to be more fundamental shifts to Wal-Mart’s approach to entice higher-income households to abandon Target and Amazon in favor of Wal-Mart, experts say.

Nick A. Egelanian, a retail expert at retail real estate services firm SiteWorks, doesn’t think that e-commerce will be a major channel for growth for Wal-Mart or that its changes to its store footprint or even the improvements to stores will move the needle all that much for the seasoned retailer. 

“Wal-Mart is a very, very successful retailer, the most efficient distributor of goods in the world,”  Egelanian told Retail Dive. “But they’re a mature company, and mature companies plateau. Does that mean you’re sick? No, it means you’ve hit a plateau, and you become a company that brings dividends instead of growth returns. Every business I’ve ever studied goes from growth to mature. You can’t grow anything forever.”

Wal-Mart CEO Doug McMillion remained optimistic in a call Thursday, while acknowledging the changes needed ahead: "We are doing what we said we’d do, and we’re on the right path. Still, we know we have a lot more work to do, and there are areas of the business that are not where they need to be."