Wal-Mart Q3 Revenues Miss, Revised Guidance Not Enough for Investors

Print Email

Wal-Mart Stores Inc. (NYSE: WMT) reported third-quarter fiscal 2017 results before markets opened Thursday. The retailing giant posted diluted earnings per share (EPS) of $0.98 on total revenues of $118.2 billion, including membership fees in Sam’s Club. In the same period a year ago, Wal-Mart reported EPS of $1.03 on revenues of $117.41 billion. Third-quarter results also compare to consensus estimates for EPS of $0.96 and $118.69 billion in revenue.

U.S. third-quarter same-store sales rose 1.2% at the company’s supercenter and discount stores. Same-store sales in the company’s Sam’s Club stores were up 1.4%, excluding fuel, and up 0.7% including fuel sales. Total U.S. net sales, including fuel, rose 1.1% for the quarter.

Operating income fell 10.4% year over year in the third quarter, including a gain of $86 million on the sale of shopping centers in Chile. Not including currency fluctuations, operating income fell 8.1%.

Wal-Mart guided fourth fiscal quarter 2017 EPS in a range of $1.18 to $1.33 and U.S. same-store sales for the quarter up 1.0% to 1.5%. The company raised its full-year EPS estimate from a prior range of $4.15 to $4.35 to a new range of $4.20 to $4.35. Guidance assumes that currency exchange rates remain where they are now and excludes a noncash gain of $0.14 per share related to the sale of Yihaodian. On a non-GAAP basis, fiscal 2017 EPS is forecast at $4.34 to $4.49, including the Yihaodian sale and excluding a $0.03 per share gain on the tax impact of the sale.

Consensus estimates call for fourth-quarter EPS of $1.33 and revenues of $132.12 billion. For the 2017 fiscal year, analysts are looking for EPS of $4.34 and sales of $487.11 billion.

During the second quarter, Wal-Mart repurchased $1.4 billion in its common stock and paid $1.5 billion in dividends.

Wal-Mart CEO Doug McMillon said:

We had a solid third quarter. Our ecommerce growth accelerated, operations in the U.S. continued to strengthen and international delivered another solid performance. We are pleased that we can see real progress stemming from our strategic choices and we appreciate the great work by our associates. Yet, we are not satisfied. We will continue to change and pick up speed to reach our longer term aspirations. We’re positioned well for this important fourth quarter and wish everyone a happy, peaceful and prosperous holiday season.

Wal-Mart’s shares were down about 3% in premarket trading Thursday, at $69.21, in a 52-week range of $58.32 to $75.19. The consensus 12-month price target was $74.85 before the results were announced. The high target is $90.00.