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Walmart trims fiscal year earnings guidance

Executives share company’s outlook at annual analysts meeting

Russell Redman

October 16, 2018

4 Min Read
Walmart trims fiscal year earnings guidance
Stephen Ironside

At its annual investment community meeting, Walmart pared its fiscal 2019 earnings-per-share forecast and projected a slight EPS decline for fiscal 2020 due to the impact of the Flipkart acquisition.

Walmart said Tuesday that it expects fiscal 2019 EPS of $2.65 to $2.80 (GAAP), down from its previous guidance of $2.90 to $3.05. Adjusted EPS is now pegged at $4.65 to $4.80 versus the earlier outlook of $4.90 to $5.05.

The Bentonville, Ark.-based retail giant noted the update reflects share dilution of 25 cents from the $16 billion purchase of Flipkart, India’s largest e-commerce player. Closed in August, the deal marked Walmart’s biggest acquisition ever and made the company Flipkart’s largest shareholder, with a 77% stake. Fiscal 2019 GAAP EPS also includes a $1.51 negative impact from the sale of Walmart Brazil and a 50-cent impact from unrealized gains/losses in Walmart’s equity investment in JD.com.

Leading into the investor event, analysts projected Walmart’s 2019 adjusted EPS at $4.79 on average, with estimates ranging from a low of $4.62 to a high of $4.90, according to Thomson Reuters.

On the revenue side, Walmart reaffirmed its fiscal 2019 sales guidance of about 2% growth (constant currency). Comparable-store sales are forecast to rise approximately 3% year over year for Walmart U.S. and Sam’s Club, with e-commerce sales surging 40%. Revenue for Walmart International is expected to inch up 0.7% (constant currency).

Related:Walmart completes acquisition of India’s Flipkart

“We’re adapting and transforming with speed to better serve our existing customers and reach new ones,” said Walmart President and CEO Doug McMillon, who gave investors a review of Walmart’s performance for 2019 and what to expect in the next fiscal year. “We’re operating with discipline, balancing our short- and long-term opportunities. While we’re excited about what we’ve done so far, we aren’t satisfied. As we execute today and build for tomorrow, our associates and unique omnichannel assets position us for success.”

Though not providing figures, Walmart said it expects fiscal 2020 adjusted EPS to decline by low single digits year over year. However, excluding the impact of Flipkart, adjusted EPS stands to rise by low to mid-single digits, according to the company.

Analysts’ consensus forecast calls for 2020 adjusted EPS of $4.71, with estimates running from a low of $4.43 to a high of $4.84, Thomson Reuters reported.

Walmart projects total sales to grow at least 3% (constant currency) in fiscal 2020. This reflects a 100-basis-point negative impact from the deconsolidation of Walmart Brazil and planned tobacco sales reduction at Sam’s Club, the company said.

Related:Strong U.S. performance boosts Walmart in second quarter

Comp-store sales in 2020 are forecast to increase 2.5% to 3% at Walmart U.S. (excluding fuel) and 1% at Sam’s Club (excluding fuel). Backing out both fuel and tobacco sales, comp-sales growth at Sam’s is estimated at 3%. E-commerce sales are expected to grow 35% for the year.

At Walmart International, sales growth is projected at 5% for 2020, including a positive impact from Flipkart and a negative impact from the deconsolidation of Walmart Brazil, the company said.

As of mid-morning trading on Tuesday, Walmart shares were up $1.83 to $95.65.

“I feel great about Walmart’s position in this rapidly changing retail landscape. We are leveraging our scale, assets and financial strength in ways unique to Walmart to enhance and build competitive advantages,” commented Chief Financial Officer Brett Biggs, who gave investors a business and financial overview of Walmart and a preview of fiscal 2020. “We continue to operate with discipline, we’re strengthening our cost culture and we’re leveraging technology, data and analytics in new ways to be more productive. Our financial strength gives us the flexibility to deliver near-term results while making strategic decisions for the longer term.”

Walmart’s planned $11 billion in capital expenditures for fiscal 2020 will focus on store remodels and e-commerce expansion as well as investment in customer initiatives, technology and the supply chain.

The company said it expects to open fewer than 10 U.S. stores for the year but forecasts more than 300 new units internationally, mainly in Mexico and China.

In online grocery, Walmart is targeting about 3,100 curbside pickup and 1,600 delivery locations by the end of fiscal 2020.

Walmart had previously set a goal to bring online grocery delivery to 100 metropolitan areas — covering 40% of U.S. households — by the end of 2018 through its own services and third-party providers. As of late September, the company said it had online grocery delivery in over 50 markets and more than 2,000 grocery pickup locations.

The retailer projects that it will have 2,140 grocery pickup sites in 430 markets, covering 69% of U.S. households, by the close of its 2019 fiscal year at the end of January.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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