Wal-Mart's Same-Store Sales Seen Rising -- Earnings Preview
February 20 2017 - 6:29AM
Dow Jones News
By Sarah Nassauer
Wal-Mart Stores Inc. will report fiscal fourth-quarter results
before the market opens Tuesday. Here is what you need to know:
EARNINGS FORECAST: Analysts forecast earnings per share of
$1.29, according to Thomson Reuters, down from $1.43 a year
ago.
REVENUE FORECAST: Analysts forecast $131.27 billion in revenue,
up from $129.7 billion a year ago.
WHAT TO WATCH:
Sales and Traffic: Analysts are expecting Wal-Mart's same-store
sales to increase for the 10th consecutive quarter, putting it on
stable footing compared with many other retailers. Wal-Mart's
traffic has risen for eight quarters thanks to improved store
operations and lower prices, but after rocky holiday-sales figures
from Macy's Inc., Kohl's Corp. and Target Corp., investors are
watching to see if Wal-Mart fared better than they did against
Amazon.com Inc. In addition, a delay in income-tax refunds likely
pushed some shopper spending into the following quarter, Barclays
said in a research note.
Consumer Health: Wal-Mart's full-year figures will provide
another data point on the health of the U.S. consumers, especially
its core low- and middle-income shopper base.
Profit Pressure: Over the last two years, Wal-Mart has invested
billions in e-commerce efforts, improving stores and raising wages
for store employees, leading to pressure on profit margins.
Wal-Mart executives have predicted flat earnings per share for the
full year and a slight increase in fiscal year 2018. Rising
same-store sales are "a sign that Wal-Mart's initiatives to improve
the store experience and grow e-commerce are working, but
unfortunately this cannot offset the cost," according to the
Buckingham Research Group. It added that a lower figure this
quarter will mark the 12th consecutive quarter of margin
decreases.
E-Commerce Check-In: After several quarters of slowing
e-commerce growth, Wal-Mart turned the tide last November. Now more
change is afoot, following the company's 2016 purchase of Jet.com
Inc. and appointment of its founder, Marc Lore, to lead Wal-Mart's
e-commerce efforts. Mr. Lore has laid off hundreds of the company's
e-commerce workers and made two small acquisitions: outdoor
retailer Moosejaw and shoe retailer ShoeBuy.com. Those initiatives
show that Mr. Lore is willing to create a stable of Wal-Mart
brands, moving away from relying solely on its namesake website to
drive online traffic.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
February 20, 2017 06:14 ET (11:14 GMT)
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