Wal-Mart's E-commerce Health is Due a Checkup--Earnings Preview
May 17 2017 - 7:29AM
Dow Jones News
By Sarah Nassauer
Wal-Mart Stores Inc. is scheduled to report fiscal first-quarter
results before the market opens Thursday. Here is what you need to
know:
EARNINGS FORECAST: Analysts forecast earnings per share of
$0.96, according to Thomson Reuters, down from $0.98 a year
ago.
REVENUE FORECAST: Analysts forecast $117.7 billion in revenue,
up from $115.9 billion a year ago.
WHAT TO WATCH:
-- RETAIL SALES & TRAFFIC: Analysts are expecting Wal-Mart's
sales at stores open at least a year to increase for the 11th
consecutive quarter, in contrast with the downward trend at many
other big-name retailers, including Macy's, Kohl's and J.C. Penney.
Wal-Mart has estimated that sales in its existing U.S. stores will
rise 1% to 1.5%. Its traffic has risen for nine quarters, thanks in
part to improvements it has made at its stores. Food deflation,
which has weighed on sales at the country's largest grocer, may
have also moderated this quarter, which will boost sales, say
analysts.
-- E-COMMERCE REALITY: It isn't clear, however, how Wal-Mart
will fare long-term against online rival Amazon.com Inc. On
Thursday we could get a moment of truth on Wal-Mart's e-commerce
health. Last quarter, for the first time it reported U.S.
e-commerce sales separately from global online sales, showing a 29%
uptick in U.S. sales, which included a boost from its Jet.com
purchase last year. This time around, if growth appears to stall,
that could be a sign that Wal-Mart isn't making inroads on Amazon
despite months of effort, including e-commerce acquisitions and new
online tactics around pricing, shipping and selection.
-- PROFIT PRESSURE: Like other retailers tethered to stores,
Wal-Mart is facing diminishing profits as it pours money into
e-commerce operations like building warehouses, expanding online
inventory and offering faster shipping. The investments have eaten
into Wal-Mart's margins, and the company last quarter said they
would again come in flat this year at $4.20 to $4.40, compared with
$4.32 last year.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
May 17, 2017 07:14 ET (11:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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