Walmart Raise Earnings Outllook as Online Sales Continue Surge

Retail giant Wal-Mart on Thursday reported better than expected third-quarter earnings and guided higher for Q4. U.S. same-store sales rose 3.4%, continuing near 10 years highs, e-commerce sales jumped 43% as it continued to inch into $AMZN’s space.

Retail giant Wal-Mart on Thursday reported better than expected third-quarter earnings and guided higher for Q4. U.S. same-store sales rose 3.4%, continuing near 10 years highs, e-commerce sales jumped 43% as it continued to inch into $AMZN’s space

Walmart 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 and reports next week.

Walmart Inc NYSE: WMT: Reported Earnings Before Open Thursday

 $1.08 Beat $1.01 EPS and $125.5B Missed $126.1 billion forecast in revenue 

Earnings

Walmart Inc. (WMT) reported arnings for the third quarter with  total revenue up 1.4% year-over-year to $124.9 billion, slightly missing the consensus estimate of $125.5 billion. Excluding currency, revenues grew 2.4% to $126.1 billion.  Consolidated net income attributable to Walmart dropped 2.2% year-over-year to $1.71 billion. On a GAAP basis, EPS totaled $0.58 while on an adjusted basis, EPS was $1.08. Analysts had projected adjusted EPS of $1.01.

Walmart Inc NYSE: WMT

Market Reaction – Pre-market Pre-market 102.50 +0.97 (0.96%)

Highlights

• Comparable sales grew 3.4% in Walmart US and 3.2% in Sam’s Club.
• US ecommerce sales grew 43% during the quarter.
• Grocery pickup is now available in around 2,100 locations and grocery delivery is available in around 600 locations, signalling progress in Walmart US omnichannel.
• Walmart US saw comp sales increase across all its categories in the low to mid-single digits, driven by strength in food and consumables, pharmacy and apparel.
• Walmart International posted comp sales growth in nine out of ten markets, including Mexico, China, Canada and the UK.
• Comp sales growth at Sam’s Club was broad-based across major categories despite seeing a negative impact of 250 basis points from tobacco.

Outlook

Walmart revised its guidance for the full year of 2019 and now expects comp sales, excluding fuel, at Walmart US to grow at least 3% versus the previous guidance of about 3%. GAAP EPS is now expected to come in the range of $2.26 to $2.36 versus the previous outlook of $2.65 to $2.80. Adjusted EPS is expected to be $4.75 to $4.85 versus the prior range of $4.65 to $4.80.

Walmart Q2 Earnings Recap

 $1.29 Beat $0.32 EPS and $128 billion Beat $1.61 billion forecast in revenue 

Earnings

Walmart Inc. reported a loss in the second quarter due to loss from the sale of its majority stake in Walmart Brazil and unrealized losses on equity investment in JD.com  $JD. However both the top and bottom line beat analysts’ expectations. Walmart beat expectations of an EPS of $1.21 and revenue is of $125.643 billion handily.

Net loss attributable to the company for the quarter was $861 million or $0.29 per share compared to a profit of $2.9 billion or $0.96 per share a year ago. Adjusted earnings rose by 34% to $1.29 per share. Revenues increased by 3.8% to $128 billion. Excluding currency, total revenue rose by 3.6% to $127.8 billion.

Walmart Inc NYSE: WMT

Market Reaction – Pre-market 99.66 +9.44 (+10.46%)

Highlights

• The mainy contributor to the top line growth was a 5.2% increase in sales at Walmart US to $82.8 billion.
• Walmart International sales rose by 4%,
• Sam’s Club sales fell 0.6% decline. Tobacco sales negatively impacted comparable sales of Sam’s Club by about 150 basis points.
• Comparable store sales growth at Walmart US and Sam’s club were 4.5% and 5% respectively in the second quarter. E-commerce sales revved up 40%. Q1 e-commerce sales grew 33%, bouncing back after Q4 growth slowed sharply to 23% from 50% in Q3.
• Walmart US comps growth was led by the performance of grocery, apparel and seasonal.
• Strong comp sales were supported by traffic and ticket growth as each exceeded 2%.
• Walmart US omnichannel saw significant progress with an expanded online assortment, including 1,100 popular new brands.
• Grocery pickup is now in more than 1,800 locations
• Walmart on track to reach about 40% of the US population by year-end with grocery delivery.

Brazil

Advent International invested a majority stake in Walmart Brazil earlier this month whereby WMT recognized cumulative foreign currency translation losses which are are weighing on the second quarter results. The transaction closed on August 1 and gives Advent International 80% equity stake in Walmart Brazil, with Walmart retaining the rest. The investment will not have any material impact on the EPS in the current fiscal year.

Guidance

• For fiscal year 2019, the company now expects net sales growth of about 2% in constant currency compared to the prior outlook growth of 1.5% to 2%.
• Adjusted EPS outlook lifted to a range of $4.90 to $5.05 from the previous guidance of $4.75 to $5.00.
• GAAP EPS is now predicted to be $2.90 to $3.05 for the full year.
• Walmart now forecasts comparable store sales growth of around 3% in Walmart US and around 3% in Sam’s Club compared to the earlier estimate of up at least 2% in Walmart US and down 1% to flat range in Sam’s Club.
• Walmart US e-commerce net sales are still anticipated to be about 40%.

Source: WalMart, AlphaStreet