Wal-Mart reported Q2 earnings that were in line with expectations. However, management cut its outlook for full-year profits.
As expected, comparable store sales growth went nowhere, climbing 0.0%. The company earned Q2 earnings of $US1.21, which was right in line with expectations.
However, Wal-Mart sees full-year earnings of $US4.90 to $US5.15 per share, which is revised down from previous guidance of $US5.10 to $US5.45.
Analysts had been forecasting $US5.17.
“Our guidance includes incremental investments in e-commerce and headwinds from higher healthcare costs in the U.S. than previously estimated,” Wal-Mart CFO Charles Holley said. “This guidance also assumes the effective tax rate will be around 34 per cent for the third quarter. The annual effective tax rate is projected to be between 32 and 34 per cent. The actual rate will depend on a number of factors, including our performance, discrete items, and pending U.S. Congressional actions regarding the extension of certain tax legislation.”
During the period, traffic to Wal-Mart stores fell 1.1%, while the average ticket climbed 1.1%.
“I’m really pleased that sales continued to be robust, growing approximately 24 per cent this quarter,” Wal-Mart Stores president Doug McMillion said. “We saw double-digit e-commerce growth from our four most important markets — the U.S., U.K., China, and Brazil.”
E-commerce sales added 0.3 percentage points to comparable store sales growth.
“As it relates to our challenges in the quarter, we wanted to see stronger comps in Wal-Mart U.S. and Sam’s Club, but both reported flat comp sales,” McMillion said. “Stronger sales in the U.S. businesses would have also helped our profit performance.”
Earlier, Wal-Mart competitor Kohl’s reported Q2 comparable store sales fell 1.3%, missing expectations for a 0.4% decline. However, earnings came in at $US1.13 per share, beating expectations for $US1.07.
Kohl’s share are up 3.4% in pre-market trading.
Wal-Mart shares are down by 0.4%.
Here are the key slides from management’s earnings presentation:
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