Walmart Q4 comes up short — and so does outlook

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Walmart Q4 comes up short — and so does outlook

By Marianne Wilson - 02/18/2020
walmart sign

Walmart Inc. reported disappointing holiday results as a shorter shopping season and weak demand for toys, video games and apparel cut into its results.

The retail giant on Tuesday reported fourth-quarter sales and earnings that missed Street expectations along with a 2021 earnings outlook that was also less than expected. In a statement, Walmart CEO Doug McMillon said that U.S. store sales leading up to Christmas were a “little softer” than expected. The retailer’s results were also impacted by political unrest in Chile, which negatively impacted its operating income by about $110 million.

“The fourth quarter started and ended strong with solid sales growth through Cyber Monday and in January,” stated Brett Biggs, CFO, Walmart. “In the few weeks before Christmas, we experienced some softness in a few general merchandise categories in our U.S. stores.”

“We believe the compressed holiday season, softer toy industry sales, a lack of newness in gaming, and some assortment challenges in apparel contributed to the decline,” the company said in a presentation.

In reporting disappointing holiday results, Walmart was by no means alone. Both Target and Kohl’s also came up short for the 2019 holiday.

Walmart reported net income of $4.14 billion, or $1.45 cents a share, for the quarter ended Jan. 31, compared with $3.69 billion, or $1.27, for the year-ago period. Excluding one-time items, Walmart earned $1.38 a share, missing analysts’ expectations of $1.43 per share.

Revenue increased 2.1% to $141.67 billion, missing analysts’ expectations of $142.49 billion. Same-store U.S. sales rose 1.9%, missing expectations of 2.3%.

Walmart said its U.S. grocery sales were strong throughout the quarter. The company said that its grocery sales on a two-year stacked basis were “the best in the past 10 years.”

E-commerce sales rose 35% during the quarter, fueled by online grocery. Walmart ended 2019 with 3,200 grocery pickup locations and 1,600 grocery delivery locations across its U.S. stores.

Walmart’s earnings guidance for fiscal 2021 guidance of $5.00 to $5.15 per share was below Street estimates of $5.22. (The forecast excludes any potential financial effect from the coronavirus outbreak in China.)

The company said it expects online sales to grow about 30%, down from last year’s growth of 37%. 

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