Moments ago the world’s largest retailer by workers (if not by market cap any more courtesy of AMZN), reported non-GAAP earnings which at $1.49/share in Q4 beat expectations of $1.46 (GAAP missed at $1.43 but let’s ignore that). The company also announced that comp sales at Walmart U.S. were positive for the fifth consecutive quarter, up 1.5% with traffic increasing 1.7%.
That was the good news: the bad news for the company which many thought had “kitchen sinked” all near-term disappointment three months ago was that same-store sales at US locations were up only 0.6%, below the 1.0% forecast, that SSS at Sam’s Club declined by -0.5% ex gas below the +1% expected, that revenue of $129.7 billion missed expectations by $900 million, that Free Cash Flow declined notably to $15.9 billion for the full year compared to $16.4 billion the year before, that Operating Income continues to drop far faster than revenues, either with or without FX suggesting costs increases are far greater than the offsetting topline…
… and that it slashed guidance on the top-line saying that net sales growth is now “expected to be relatively flat, which compares to the previous estimate for growth of 3 to 4 percent on a constant currency basis.” The reason: rising wages and strong USD headwinds, precisely the two things which the Fed is desperately wants more of, which means that as long as Yellen keeps getting her way, stocks like WMT will suffer.
The full guidance.
- The impact from incremental investments in wages and training in the U.S. is projected to be approximately $0.30 per share for the full year. As a result of the timing of wage investments, the company expects the first quarter will be impacted somewhat more on a year-over-year basis than in subsequent quarters.
- Currency exchange rate fluctuations, based on current exchange rates, are expected to negatively impact net sales by approximately $12 billion for fiscal year 2017. Additionally, currency is expected to impact EPS by approximately $0.10 per share for the year, including approximately $0.03 in the first quarter.
- The company is updating its estimate for net sales growth for fiscal year 2017. Net sales growth is now expected to be relatively flat, which compares to the previous estimate for growth of 3 to 4 percent on a constant currency basis. This change reflects the impact from recently announced store closures globally, as well as the continued strengthening of the U.S. dollar. Excluding the impact of currency and store closures, our net sales growth guidance would have remained in the 3 to 4 percent growth range.
Finally, in n attempt to cushion the blow from its results, WMT announced it would boost its annual dividend from $1.96 to $2.00/share. Judging by the more than 4% plunge in WMT’s $210BN market cap (which accounts for more than 2% of the Dow Jones) after the earnings report few care.
via Zero Hedge http://ift.tt/1SU6vls Tyler Durden