Walmart’s Q4 Sales & Profit Slip, Weighs On Stock Market

The earnings woes of retail giant, Wal-Mart Stores Inc. is weighing on the U.S. stock Market today offsetting a boost to the Dow Jones industrial average courtesy of technology firm IBM.

The retail behemoth said its fourth quarter operating income slid 16.4 percent year-over-year, or 13.6 percent on a currency-neutral basis, to $6.6 billion. Reported diluted earnings per share (EPS), at $1.43, came in below market watchers’ estimates for EPS of $1.46. Adjusted EPS, however, beat estimates at $1.49.

Sales also declined 1.4 percent, to $129.7 billion, compared to sales of $131.6 billion in the comparable quarter. Excluding currency impacts, Walmart said its Q4 revenues would have climbed 2.2 percent to $134.4 billion.

For the fiscal year, Walmart’s diluted EPS was $4.57 (or $4.59 adjusted) and its total reported revenue was $482.1 billion (or $499.4 billion currency neutral).

We are seeing momentum in our Walmart U.S. business as we continue to lap positive comps, and our international business is healthy and growing,” Walmart President and CEO Doug McMillon said in a release. “We are pleased with fundamental trends that are allowing us to improve our stores, add critical capabilities and deepen our digital relationships with customers. Our initiatives are making it simpler and more convenient for customers to shop at Walmart.”

Comp sales at Walmart U.S. gained 0.6 percent in the quarter. Meanwhile, Walmart International net sales were $32.7 billion on a reported basis. On a constant currency basis, international net sales were $37.4 billion, an increase of 3.3 percent, led by strength at Walmex and in Canada, the company said.

Globally, on a constant currency basis, e-commerce sales and GMV (gross merchandise volume) increased 8 percent.

Looking ahead, the company updated its estimate for net sales growth for FY17. Net sales growth is now expected to be relatively flat — compared to the previous estimate for growth of 3 to 4 percent on a constant currency basis. The lowered outlook, Walmart said reflects the impact of its planned store closures, announced in early Jan. 2016, and the stronger U.S. dollar. The company’s controversial plan to beef up employee wages is also expected to affect future earnings. The impact from incremental investments in wages and training in the U.S. is projected to be approximately 30 cents per share for the full year.

At press time (11:30 a.m. EST), Walmart’s share price had declined more than 5 percent.

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