Earnings Highlights and Review: Wal-Mart Exceeded Earnings Expectations; Reported 10th Consecutive Quarter of Positive Comp Traffic

Research Desk Line-up: Dollar General Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 8, 2017 / Pro-Trader Daily publishes post-earnings coverage on Wal-Mart Stores, Inc. (NYSE: WMT) following the Company’s announcement of its first quarter fiscal 2018 financial results on May 18, 2017. The American multinational retailing corporation’s net sales improved 1.4%, while EPS grew 2%. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Get more of our free earnings reports coverage from other constituents of the Discount, Variety Stores industry. Pro-TD has currently selected Dollar General Corporation (NYSE: DG) for due-diligence and potential coverage as the Company reported on June 01, 2017, its financial results for Q1 2017 which ended on May 05, 2017. Register for a free membership today, and be among the early birds that get access to our report on Dollar General when we publish it.

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Earnings Reviewed

For its first quarter fiscal 2018, Wal-Mart’s sales were $117.5 billion, an increase of 1.4% compared to sales of $115.9 billion in Q1 FY17 and slightly below analysts’ consensus of $117.8 billion. Excluding currency, the Company’s total revenue was $118.8 billion, an increase of 2.5%.

For Q1 FY18, Wal-Mart reported net income of $3.04 billion, or $1.00 per share compared to net income of $3.08 billion, or $0.98 per share, for Q1 FY17. The Company’s earnings outperformed Wall Street’s expectations of $0.96 per share.

Segment Details

For Q1 FY18, Wal-Mart US segment generated net sales growth of 2.9% to $75.4 billion, including the impact of fuel sales. The segment’s operating income increased marginally by 0.9% to $4.27 billion.

Walmart US same-store sales (comp) increased 1.4%, driven by a 1.5% increase in traffic. On a 2-year stacked basis, comp sales and traffic were up 2.4% and 3.0%, respectively. Ecommerce growth at Walmart US was strong as sales and GMV increased 63% and 69%, respectively.

Wal-Mart US gross margin was flat during Q1 FY18 as savings from procuring merchandise and the acceleration of post-holiday markdowns taken in the previous quarter benefited the margin rate, but were offset by investments in price and the mix effects from the Company’s growing ecommerce business.

During Q1 FY18, Wal-Mart US total inventory declined 3.3%, and comp store inventory declined 7.3%. The segment reported net openings of 12 Supercenters (including conversions and relocations) and net closings of 2 Neighborhood Markets in the reported quarter. The Company also remodeled 55 stores in Q1 FY18.

During Q1 FY18, net sales at Walmart International were $27.1 billion, down 3.5% in a y-o-y basis. Currency exchange rate fluctuations negatively impacted net sales by $1.2 billion. Excluding currency, the segment’s net sales were $28.3 billion, reflecting an increase of 0.8%. Walmart International’s operating income declined 0.1% to $1.16 billion in the reported quarter; however, on a constant currency basis, the segment’s operating income surged 9.0% to $1.27 billion excluding a benefit of approximately $47 million from a land sale in one of its markets, and operating income would have increased 5.0% on a constant currency basis.

For Q1 FY18, Wal-Mart’s net sales at Sam’s Club, which consist of membership warehouse clubs, totaled $13.99 billion. The segment’s operating income grew 0.2% to $414 million in the reported quarter. Sam’s Club comps rose 150 basis points to 1.6% , led by growth in comp traffic of 1.1%, compared with a growth of 0.1% in the prior-year’s same quarter. Excluding fuel the segment’s gross profit rate had decreased by 22 basis points.

During Q1 FY18, Sam’s Club membership income increased 0.9% versus last year. The segment’s inventory increased 2.7% driven by food, seasonal, and apparel.

Cash Flow

As of April 30, 2017, Wal-Mart had cash and cash equivalents of $6.55 billion and total long-term debt of $33.8 billion. The Company generated $5.4 billion in operating cash flow and returned $3.7 billion to shareholders through dividends and share repurchases.

Outlook

For Q2 FY18, Wal-Mart expects US comp sales growth in the range of 1.5% to 2.0%. The Company’s Sam’s Club comp sales, without the impact of fuel sales, are forecasted to grow in the range of 1%–1.5%. Wal-Mart is expecting adjusted earnings in the band of $1.00 to $1.08 per share for the upcoming quarter.

Stock Performance

At the closing bell, on Wednesday, June 07, 2017, Wal-Mart Stores’ stock was marginally up 0.28%, ending the trading session at $79.15. A total volume of 8.51 million shares have exchanged hands, which was higher than the 3-month average volume of 7.78 million shares. The Company’s stock price surged 13.40% in the last three months, 13.17% in the past six months, and 11.43% in the previous twelve months. Moreover, the stock rallied 14.51% since the start of the year. The stock is trading at a PE ratio of 17.96 and has a dividend yield of 2.58%. The stock currently has a market cap of $240.52 billion.

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