Walmart Boosts US Sales for First Time in 7 Quarters

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Source: courtesy of Wal-Mart Stores Inc.
Wal-Mart Stores Inc. (NYSE: WMT) reported third-quarter fiscal 2015 results before markets opened Thursday. The retailing giant posted diluted earnings per share (EPS) of $1.15 on total revenues of $119 billion, which includes membership fees in Sam’s Club. In the same period a year ago, Walmart reported EPS of $1.14 on revenues of $115.69 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.12 and $118.35 billion in revenue.

U.S. third-quarter same-store sales, both including and excluding fuel sales, rose 0.5% at the company’s supercenter and discount stores. Same-store sales in the company’s Sam’s Club stores were up 0.4% excluding fuel and up 0.3% including fuel sales. Same-store sales at the Neighborhood Market stores rose approximately 5.5% in the quarter, and total U.S. net sales rose 3.4%.

Walmart’s U.S. same-store sales posted their first gain in seven quarters, and the store said the positive result was the result of inflation hampered by SNAP-related headwinds. For the fourth quarter, U.S. same-store sales are guided to between flat to up 1%. Same-store sales, excluding fuel, at Sam’s Club stores are projected to be flat to up 2% in the fourth quarter.

For the fourth quarter of its 2015 fiscal year, Walmart forecast EPS in a range of $1.46 to $1.56, compared with actual EPS of $1.60 in the same quarter last year and the consensus estimate for $1.57. The company narrowed and lowered the top-end of its full-year EPS guidance from a prior range of $4.90 to $5.15 to a new range of $4.92 to $5.02. The consensus estimate for full-year EPS is currently $4.99. Walmart’s fourth-quarter EPS estimate includes a charge of approximately $0.03 related to store closings in Japan.

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Walmart’s CEO said:

The highlights for the quarter include the positive comp in Walmart U.S., including the strong performance from Neighborhood Markets, the 21 percent increase in e-commerce sales globally and the profit performances from Sam’s Club and our International business. … Being the price leader is an ongoing priority for us and a commitment to customers. As with every year, that is even more important during the holiday season. We have some things in our favor this fourth quarter, including lower fuel prices in the U.S. and other key markets, and we’re set to deliver for customers during this time.

E-commerce sales boosted same-store sales at Walmart and Sam’s Club stores by approximately 0.2% in the quarter.

U.S. operating income fell from $4.99 billion a year ago to $4.93 billion, while international operating income rose from $1.38 billion to $1.43 billion.

Is this the beginning of a turnaround at the world’s largest retailer? Perhaps it is too early to declare that, but this report is the most upbeat we have seen from Walmart in a long time.

Walmart’s shares were up more than 2% in premarket trading Thursday morning, at $80.89 in a 52-week range of $72.27 to $81.37. Thomson Reuters had a consensus analyst price target of around $78.80 before the results were announced.

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