MoneyGram slashes forecast as Wal-Mart threat looms
(Reuters) - MoneyGram International Inc (MGI.O), the world's second-largest money transfer company, slashed its forecast for the year on fears of competition from Wal-Mart Stores Inc (WMT.N).
The world's largest retailer had said earlier this month it would launch a money transfer service called "Walmart-2-Walmart".
MoneyGram said it expects full-year revenue growth to be in the range of 1-3 percent on a constant currency basis, down from its previous forecast of 8-10 percent.
The company, which posted better-than-expected first-quarter results, said it expects adjusted EBITDA growth of 0-2 percent, down from 5-7 percent.
MoneyGram, which currently provides money transfer services for Wal-Mart shoppers, said 12 percent of its total first-quarter revenue came from transactions at the chain in the United States.
"Due to the limited time the competing product has been in the market, it is uncertain what the cannibalization effect or competitive price environment will be for the U.S.-to-U.S. business," MoneyGram said in its earnings statement on Tuesday.
The company said it had initiated an accelerated cost-cutting program and would focus on growing its U.S. outbound money transfer business.
Wal-Mart has said it will not offer the service online or in its international stores.
MoneyGram said that transfers that originated outside the United States grew 11 percent in the quarter.
Bigger rival Western Union Co (WU.N) is scheduled to report results on Thursday.
MoneyGram's share were little changes in premarket trading on Tuesday. They have fallen 10 percent since Wal-Mart's announcement to Monday's closing of $13.50.
(Reporting by Tanya Agrawal in Bangalore; Editing by Sriraj Kalluvila)