Walmart Posts Mixed Results, Home Has Solid Performance

Wal-Mart Stores posted mixed results for the fourth quarter although the performance of the home department was "solid." For the fourth quarter ended January 31, Wal-Mart Stores reported company income from continuing operations of $4.57 billion, or $1.43 per diluted share, versus $4.97 billion, or $1.53 per diluted share, in the period a year earlier.

Comparable store sales at Walmart stores in the United States gained 0.6%, without the impact of fuel price volatility included, with the increase attributable to higher traffic, as the Neighborhood Market division posted a particularly strong 7% comp advance. Sam's Club comps slipped by 0.5%, so, in total, Walmart U.S. division comps increased 0.4%.

Wal-Mart net sales were $128.68 billion versus $130.65 billion in the year-ago quarter while net revenues, including membership fees and other income, was $129.67 billion versus $131.57 billion in the prior-year period.

According to Wal-Mart, adjusted earnings per share, excluding one-time items, was $1.49, which beat a Zacks Investment Research analyst average estimate by three cents. The investment firm noted that unfavorable currency exchange rates, soft sales at Sam's Club and poor revenue performance in the international division hurt results and caused sales to fall short of analyst estimates.

On a constant currency basis, total revenue was $134.4 billion, up 2.2%, Walmart indicated. Globally, on a constant currency basis, e-commerce sales advanced 8%, below recent retail sector digital revenue growth rates. Pressure on growth came in key international markets, Walmart contended.

Operating income was down 16.4% to $6.6 billion versus the year earlier quarter, or down 13.6% without the impact of currency exchange rate volatility. Walmart U.S. operating income was down 17.1% to $5.1 billion versus the year earlier, or 5.3% when adjusted for the impact of recent store closures.

For the full fiscal year, company net income was $14.69 billion, or $4.57 per diluted share, versus $16.18 billion, or $5.05 per diluted share, in the year earlier. Net sales and net revenues both slipped 0.7% to $478.61 billion and $482.13 billion respectively compared with the year earlier.

Wal-Mart noted that adjusted EPS was $4.59. On a constant currency basis, the retailer indicated, total revenue was $499.4 billion, up 2.8%. Globally, for the full fiscal year e-commerce sales on a constant currency basis increased approximately 12% to $13.7 billion versus the previous year. Operating income decreased 11.2%, which includes a 290 basis point impact from one-time items, year over year, Wal-Mart maintained.

In a conference call, Wal-Mart CEO Doug McMillon called the latest fiscal year one of investment in employees, many of whom have benefited from company-wide raises, and technology. He said that the company is implementing a new strategy at Sam's Club, where lackluster food sales particularly hurt performance. At the same time, the soft economic climates in China and Brazil have depressed sales, although China stores have suffered less weakness then e-commerce revenues, he suggested. In the United Kingdom, a tough competitive climate has put pressure on Walmart results, he observed.

In the conference call, Walmart U.S. president Greg Foran characterized the home department sales performance as "solid" due to better in-stocks, updated assortments and product introductions.

Walmart operates 11,535 stores under 72 banners in 28 countries and e-commerce websites in 11 countries.