Walmart Earnings Are a Huge Disappointment

Walmart Inc (NYSE: WMT) was a clear leader among brick-and-mortar U.S. retailers through most of 2017, but the stock dropped more than 7 percent in pre-market trading Tuesday after the company’s latest earnings report showed Walmart dropped the ball in the critical holiday shopping season.

Walmart reported its fiscal fourth-quarter 2018 adjusted earnings per share of $1.33, shy of consensus analyst estimates of $1.37. Revenue on the quarter was $136.3 billion, topping consensus forecasts of $134.9 billion.

U.S. same-store sales growth was another highlight, jumping 2.6 percent compared to consensus estimates of 2.2 percent.

Total sales were up 4.1 percent year-over-year, U.S. store traffic was up 1.6 percent and average ticket value was up 1 percent.

Sales for the Sam’s Club division were up 2.4 percent, and all but two of Walmart’s 11 international divisions reported positive same-store sales growth as well.

Unfortunately for investors looking for signs Walmart can stave off (AMZN), Walmart reported just 23 percent growth in online sales, down from 50 percent just one quarter ago.

CEO Doug McMillon says in a statement that Walmart has positive momentum heading into fiscal 2019.

“We’re making decisions to position the business for success and investing to win with customers and shareholders,” McMillon says.

In addition to the online disappointment in the fourth quarter, Walmart’s fiscal 2019 earnings was also on the soft side. Walmart is expecting 2019 EPS of between $4.75 and $5.00. Analysts had been expecting $5.13. Walmart is also calling for 2 percent U.S. same-store sales growth this year.

Bank of America analyst Robert Ohmes defended Walmart’s weak e-commerce number and says the downturn in online growth will not be a trend.

“E-commerce growth is expected to reaccelerate from fiscal fourth-quarter trends to approximately 40 percent for this fiscal year, which is ahead of our 37 percent forecast,” Ohmes says.

Ohmes says nothing in Tuesday’s report changes his prediction that Walmart will be one of the market leaders in a cyclical boom in discount stores over the next five to 10 years.

“We would view…

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