The U.S. multinational retrial corporation Walmart (WMT, Financial) reported mixed fourth quarter earnings on Tuesday, surpassing revenue estimates but falling short of earnings. This was due to the fact that the company had its promotional activity during the quarter that brought down the big-box retailer’s gross margins as well as the never-ending war with online behemoth Amazon (AMZN, Financial) for the retail market share. Also, the company had increased bonuses for its employees.
Diving into the numbers
The retailer’s adjusted earnings per share (EPS) for the quarter were $1.33, which fell short of estimates of $1.37 per share. Quarterly revenue for the company stood at $136.3 billion, which surpassed the estimates by 1.04%.
As a matter of fact, the company performed well in its home market. U.S. same store sales rose 2.6%, up from a 1.8% gain a year ago. This quarter marked the company’s 14th straight quarter of comparable-store sales increase. However, e-commerce sales in the U.S. rose just 23%, compared to a mammoth 50% rise in the third quarter.
The company reported net earnings of $2.18 billion, or 73 cents a share, during the quarter, down from $3.76 billion, or $1.22 a share, reported in the year-ago quarter. The company has hiked its annual cash dividend by 2% to $2.08 per share.
Comps at Sam’s Club division soared 2.4% year-over-year. The company’s nine other divisions out of eleven posted positive same-store sales growth during the quarter.
Bird’s-eye view
Walmart has launched a number of versatile items online through a series of acquisitions that started off a year and a half ago with Jet.com, Bonobos and ModCloth. The company is looking forward to launch this year a revamped website with emphasis on fashion and home goods. As a matter of fact, the retail giant has also joined forces with Lord and Taylor to provide a dedicated space on its site.
Furthermore, Walmart and Google are teaming up in online shopping to take on Amazon and its Alexa-powered Echo devices. Here, the customers can use voice commands to order hundreds and thousands of items for delivery. As of now, Amazon’s Echo has the larger chunk of the speaker market share.
Besides giving employees a bonus, the company raised their wages to $11 an hour. Walmart has also prolonged its maternity and parental leave days.
Guidance
The big-box retail projects full-year earnings per share to range from $4.75 to $5 per share. U.S. comps are expected to surge a minimum 2% this year while comps at Sam’s Club division is expected to rise by at least 4%. On a positive note, e-commerce sales are in line to grow 40% in 2018.
Disclosure: I do not hold any position in the stocks mentioned in this article.
