Market Takes Walmart’s Guidance Cut in Stride

Walmart Inc (NYSE: WMT) lowered its full-year earnings per share guidance on Tuesday and said online sales growth will likely slow in fiscal 2019. Despite the cautious outlook, WMT stock traded higher on Tuesday, and analysts say the near- and long-term outlook for the retail giant is still extremely bullish.

Walmart has reiterated its full-year fiscal 2019 sales guidance, but has reduced its EPS guidance by 25 cents. The company now expects 2019 adjusted EPS of between $4.65 and $4.80, down from a previous range of between $4.90 and $5.05.

WMT stock took the guidance cut in stride because the company had previously indicated its $16 billion acquisition of a 77 percent ownership stake in India’s Flipkart in May would negatively impact earnings in the near term.

“We are leveraging our scale, assets and financial strength in ways unique to Walmart to enhance and build competitive advantages,” CFO Brett Briggs says in a news release.

Looking ahead to fiscal 2020, Walmart says it is expecting net sales growth of at least 3 percent and U.S. same-store sales growth of between 2.5 and 3 percent. Excluding fuel, Walmart is expecting Sam’s Club same-store sales growth of 1 percent.

Walmart guided for fiscal 2020 EPS to decline by a “low-single digit percentage range.”

Walmart also said it is expecting U.S. online sales growth to slow to 35 percent in fiscal 2020, down from 40 percent in 2019. Finally, the company is forecasting roughly 5 percent growth in international net sales, excluding currency effects.

WMT stock price action suggests there are no big surprises in Walmart’s updated guidance. Bank of America analyst Robert Ohmes says his latest card data for the third quarter indicates Walmart and competitor Target Corp. (TGT) are on track for strong earnings reports.

“We believe WMT and TGT’s impressive 2Q sales momentum has continued into 3Q, supported by Discount Store Decade tailwinds and a favorable macro backdrop,” Ohmes says.

“Data for August and September suggests…

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