Thursday, February 17, 2011

Wal-Mart Stores Inc. (NYSE: WMT): Q4 Earnings Preview 2010

Wal-Mart Stores Inc. (NYSE: WMT), the world's largest retailer, is scheduled to release its fourth-quarter earnings before the opening bell on Tuesday, February 22, 2011. Analysts, on average, expect the company to report earnings of $1.31 a share on revenue of $117.88 billion. In the year ago period, the company reported earnings of $1.17 per share on revenue of $113.65 billion.

Wal-Mart Stores, Inc. operates retail stores in various formats worldwide.The company operates in three business segments: Walmart U.S., International and Sam’s Club.

In the preceding third quarter, the company's net income was $3.44 billion, or 95 cents a share, compared with a profit of $3.14 billion, or 81 cents, in the prior-year quarter. Earnings per share from continuing operations attributable to Wal-Mart for the third quarter of fiscal year 2011 were 95 cents, including a tax benefit of $191 million, or approximately 5 cents per share. Revenue increased 2.6% to $101.2 billion from $98.7 billion. Analysts, on average, expected the company to report earnings of 90 cents per share on revenue of $102.43 billion.

At its last earnings call in November, the company said that it expects fourth-quarter earnings per share from continuing operations attributable to Wal-Mart to range from $1.29 to $1.33. The company expects fourth-quarter same-store sales to decline as much as 1 percent or rise as much as 2 percent.The company also lifted its full year guidance to $4.08 to $4.12 earnings per share from the previous range of $3.95 to $4.05 per share.

Wal-Mart has been grappling with five consecutive quarters of declining U.S. sales, which have partially been blamed on several internal gaffes. Same-store sales at Wal-Mart’s namesake U.S. chain have fallen for six straight quarters. In an effort to reverse the trend, the company reversing its recent operational decisions, strategies that failed to gain traction and allowed dollar stores to grow. As part of its "Project Impact" initative, Wal-Mart removed merchandise that it deemed unprofitable from its shelves, a move that received significant backlash from loyal shoppers. The company is currently in the process of restocking some of these items, but it has yet to result in a turn in sales. The company also discontinued its "Action Alley" -- wide aisles filled with clearance merchandise. The company is also in the process of reviving the aisles. Walmart has also begun emphasizing low prices and adding back the thousands of name brand products it previously eliminated. It is also planning expansion into cities and neighborhoods.

The company is also facing increasing competition from domestic discount chains like Target (NYSE: TGT), Costco (NASDAQ: COST), and BJ’s Wholesale Club (NYSE: BJ), who have slashed prices to compete with Walmart for the discount consumer. Family Dollar (NYSE: FDO), Dollar Tree (NASDAQ: DLTR), and other dollar stores are also both doing a great job of attracting lower income customers. And the ever-growing online presence of Amazon (NASDAQ: AMZN) may be Walmart’s biggest threat.

The company has become increasingly reliant on growth from its international markets, about a quarter of its sales, while growth in the U.S. has slowed. Wal-Mart has bought stakes in local operators in markets from Chile to China.

Late in November, Wal-Mart agreed to buy a 51% stake in South African wholesaler Massmart for more than US$2 billion. Massmart operates in 14 countries in sub-Saharan Africa through 288 stores; its brands include Makro, Game and Builders Express.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire