Walmart Warns Healthcare Costs And Taxes Are Eating Into Profits

Walmart Q3 financial results were a bit better than what analysts were expecting. However, Q4 guidance was a bit weak.

Comparable store sales in Walmart’s US stores climbed by 0.5% during Q3.

Earnings improved to $US1.15 per share, which was higher than the $US1.12 forecast by analysts.

“We’re investing in key areas of our business, including wages in our U.S. stores and in e-commerce and mobile capabilities,” CEO Doug McMillon said. “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 favour 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.”

However, Q4 guidance was a bit weak. Management expects to earn $US1.46-$US1.56 per share, which compares to analysts’ forecast for $US1.57.

“Our earnings per share guidance assumes several important factors, including the economic conditions in several of our largest markets, and a highly promotional holiday season,” CFO Charles Holley said. “As a reminder, our full year EPS guidance includes the four factors we discussed last quarter, which were higher U.S. health-care costs, incremental investments in e-commerce, ongoing investments in Sam’s Club, and our effective tax rate.”

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