Walmart’s Earnings Prove It’s Getting Tougher to Please Retail Investors

Wal-Mart Stores Inc. today posted second-quarter results that topped Wall Street’s top- and bottom-line estimates. Amid sluggish brick-and-mortar trends, the retailer also pulled off a 1.8 percent comp gain evidencing that its store traffic is on the rise. (Reported comp gains are for Walmart U.S.)

Still, investors have been selling off the stock throughout the morning trading hours — as of 10:50 a.m. ET, shares remained down more than 2 percent at $79.28.

Walmart’s earnings — showing a sales improvement of 2 percent year-over-year to $123.4 billion, against bets for sales of $122.8 billion — follows an upbeat release Wednesday from competitor Target Corp.

While Target saw modest share gains on the heels of its Q2 report, the fate of Walmart’s stock today has been similar to that of department stores Kohl’s Corp. and Macy’s Inc., which saw their stocks tumble despite a solid second-quarter performance.

Overall caution around the future of retail, beat-and-raised-minded investors and marketwide uncertainty surrounding President Donald Trump — and his two newly disbanded CEO led advisory councils — are among the likely culprits. (Macy’s and Kohl’s kept their guidance in tact following their earnings release.)

Nevertheless, Walmart said its digital business is booming: E-commerce at Walmart U.S. grew 60 percent during the period, and gross merchandise volume increased 67 percent.

Our strategy is to make every day easier for busy families — to accomplish this, we continue our transformation to become more of a digital enterprise that moves with speed and agility,” president and CEO Doug McMillion told investors during a conference call today. “I’m encouraged by innovation in the business.

McMillon said the firm is continuing to test associate delivery of Walmart.com orders in a few stores and, by the end of the year, plans to have approximately 100 automated pickup towers in stores across the U.S.

During the second quarter, net income declined 23 percent to $2.9 billion, or 96 cents per share. On an adjusted basis, earnings per diluted share were $1.08, modestly beating analysts’ forecasts for diluted EPS of $1.07.

Walmart increased its EPS forecast for the fiscal year and expects reported EPS of $4.18 to $4.28 and adjusted EPS in the range of $4.30 to $4.40, compared with previous guidance for adjusted EPS of $4.20 to $4.40.

“We’re encouraged with the solid first-half results,” McMillon said. “We’re uniquely positioned to deliver the seamless, fast, innovative and exciting shopping experience our customers desire.”

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