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Retail giant Wal-Mart $WMT on Thursday reported better than expected third-quarter earnings and guided higher for Q4. Notable was its e-commerce sales jumped 50%. WMT stock was up over 5% premarket. 
 
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Wal-Mart has been acquiring e-commerce firms in it's battle with Amazon. $WMT has added Jet.com, Shoebuy, Moosejaw, ModCloth and Bonobos. Target as also been growing it's e-Commerce segment.
 
 
Earnings: Adjusted earnings of $1.00 per share  beat the consensus estimate of 97 cents, up 2% from 98 cents in the year-ago period. Revenues of $123.2 billion (including membership and other income)  up 4.2% year over year beating consensus of $121.1 billion. Operating income fell 6.9% to $4.76 billion, the operating income margin fell 40 basis points to 3.9%. On a constant currency basis, operating income declined 8.1% to $4.7 billion.
 
Reaction: Wal-Mart Stores Inc NYSE: WMT Pre-market: $94.564.73 (5.27%)
 
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Walmart Segments
 
 
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  • Walmart U.S.: Net sales growth of 4.3% to $77.7 billion in the reported quarter. U.S. comparable-store sales (comps), excluding fuel jumped 2.7%, compared with 1.2% growth in the prior-year quarter. Notably, this was the 13th consecutive quarter of positive comps. While comp traffic improved 1.5%, average ticket inched up 1.2% in the quarter.

  • Walmart e-commerce sales positively impacted comp sales at Walmart U.S. by 80 bps. The e-commerce growth at Walmart U.S. was manly driven by Walmart.com, with net sales and GMV up 50% and 54%, respectively. Operating income at the segment inched up by 0.8% to over $4 billion.

  • Walmart International:  Net sales went up by 4.1% to $29.5 billion. On a currency-neutral basis, net sales improved 2.5% to $29.1 billion. However, operating income declined 7.8% to $1.2 billion. On a constant currency basis, it slumped 12.2%.

  • Sam’s Club: Including membership warehouse clubs, posted net sales growth of 4.4% to $14.9 billion. Sam’s Club comps, excluding fuel, rose 2.8% compared with 1.4% growth in the prior-year quarter. Notably 10 out 11 markets recorded positive comps, which included the company’s biggest markets. Comp traffic grew 3.6%, while ticket dipped 0.8%. E-commerce sales positively impacted comps by approximately 80 basis points in the quarter. Operating income at Sam’s Club jumped 12.9% to $447 million.

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Guidance

4Q18  Walmart expects both U.S. comps (excluding fuel) and Sam’s Club comps (excluding fuel) to increase in a range of 1.5-2.0% for the 13-week period ending Jan 26, 2018.

Fiscal 2018 $WMT raised its bottom-line view for fiscal 2018 and now envisions adjusted earnings in the range of $4.38-$4.46 per share, as compared with the prior expectation of $4.30-$4.40. GAAP earnings are expected to range from $3.84-$3.92 per share.

Cash Position

Walmart ended the quarter with cash and cash equivalents of roughly $7 billion, long-term debt of $34.2 billion, long-term capital lease and financing obligations of $6.7 billion and shareholders’ equity of $78.9 billion. In the first nine months of fiscal 2018, Walmart generated cash flow from operations of $17.1 billion and incurred capital expenditures of $6.9 billion, resulting in free cash flow of $10.2 billion.

Dividends and Share Repurchases

Walmart paid $1.5 billion in dividends during the quarter. The company repurchased about 27 million shares worth $2.2 billion under its $20 billion authorization announced in October 2015. Further, management stated that from Nov 20, it will make buybacks under its October 2017 authorization of $20 billion

Source: WalMart, AlphaStreet

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