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.

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 fiscal fourth-quarter 2010 financial results before the opening bell on Thursday, February 18, 2010. Analysts, on average, expect the company to report earnings of $1.12 a share on revenue of $114.51 billion. In the year ago period, the company posted earnings of $1.03 per share on revenue of $109.12 billion.

Wal-Mart Stores, Inc. serves customers and club members more than 200 million times per week at more than 8,000 retail units under 53 different banners in 15 countries. The Company operates in three business segments: Walmart U.S. and Sam’s Club in the United States, and Walmart International in 14 countries and Puerto Rico. In January 2009, the Company acquired 57% of D&S S.A.

In the preceding third quarter, the company reported that its net income rose to $3.239 billion from $3.138 billion reported in the prior-year period. Net income per share attributable to the company grew to $0.84 from $0.80. Revenue increased to $99.411 billion from $98.345 billion. Analysts, on average, expected the company to earn $0.81 per share on revenue of $99.88 billion for the quarter.

For the fourth quarter, the company anticipated earnings per share from continuing operations to be between $1.08 and $1.12.

In November, the company also revised its fiscal 2010 earnings per share from continuing operations outlook to $3.57 to $3.61 from $3.50 to $3.60. Walmart U.S. expects comparable store sales during the 13-week period from October 31, 2009 through January 29, 2010 to be flat, plus or minus one percent - as compared to the 2.4% comp for the same period last year. Sam's Club expects comparable club sales during the fourth quarter to be nearly flat, plus or minus one percent.

In January, the retail giant announced its plans to cut about 11,200 jobs at its Sam's Club membership warehouse stores in the U.S. Earlier in January, Wal-Mart decided to close ten "financially underperforming" Sam's Club locations in the U.S. and lay off about 1,500 workers. The company said that the decision to close the stores was made after reviewing the company's current business performance and as the stores continued to lose money.

Wal-Mart is poised to benefit from a rebound in consumer spending, improvement in the job market and economic stabilization. According to the National Retail Federation, U.S. total holiday sales in November and December rose 1.1 percent industrywide, while it had forecast a 1 percent drop. In January, retail sales increased by 0.5% month-over-month.

The company's stock currently trades at a forward P/E (fye 31-Jan-11) of 13.32 and PEG Ratio (5 yr expected) of 1.24. In terms of stock performance, Wal-Mart shares have gained 10 percent over the past year.

Full Disclosure: None.