Walmart (WMT) is scheduled to report results of its second quarter before the market open on Thursday, August 15, with a conference call scheduled for 8:00 am EDT. What to watch for:
1. OUTLOOK: In February, Walmart reiterated its fiscal 2020 guidance, including sales growth of 3% or greater. Walmart U.S. comp sales growth is expected to be 2.5%-3% and eCommerce net sales growth is expected to be around 35% for FY20, the company said. Earnings per share are expected to be down by a low single digit percentage vs. fiscal 2019. The current Street forecast for EPS and revenue are $4.83 and $526.78B, respectively. The company previously said it was moving to an annual guidance framework with its quarterly updates, and that while there may be fluctuations within the quarters, "we believe EPS growth will be relatively consistent across the year." In May, Walmart said it expects currency to negatively impact Q2 sales by about $1B. Baird analyst Peter Benedict said he remains comfortable with Q2 expectations ahead of Walmart's earnings report. The analyst believes comp trends will remain solid and although he expects pressure on margins from Flipkart, he sees the company continuing to manage and drive SG&A efficiencies.
2. COMPETITION: Retailers like Walmart have been hurt by an increase in online shopping on sites like Amazon (AMZN) rather than at brick-and-mortar stores. Walmart announced this week that it is stepping up its battle with Amazon by offering one-day delivery without a shipping fee, weeks after Amazon announced a similar offer. Earlier this year, Amazon said it plans to deliver packages to Prime members of in one day and expects to spend $800M toward the shipping goal in the second quarter alone. Walmart said that as many as 220,000 items, which range from laundry detergent to toys and electronics, will qualify for one-day shipping. Walmart started offering same-day pickup in its stores in 2011 and caught up with Amazon's two-day free shipping two years ago by offering it without a membership fee.
3. FIREARM SALES: A man armed with a rifle opened fire at a Walmart store in El Paso, Texas, in early August, killing 20 people and wounding 26 others. Following the August 3 massacre, Walmart said it has no plans to stop selling guns or ammunition. A spokesman said, "We go beyond federal law requiring all customers to pass a background check before purchasing any firearm," adding that Walmart stopped selling "modern sporting rifles" in 2015 and raised the minimum age for gun purchases to 21 from 18 in 2018. "As it becomes clear that the shooting in El Paso was motivated by hate, we're more resolved than ever to foster an inclusive environment where all people are valued and welcomed. Our store in El Paso is well known as a tight-knit community hub, where we serve customers from both sides of the border. I continue to be amazed at the strength and resilience we find in the diversity of communities where we live and work," CEO Doug McMillon wrote in a post on his Instagram page. Following the mass shooting in El Paso, Walmart decided to remove violent video game displays and signs from stores. "We've taken this action out of respect for the incidents of the past week, and this action does not reflect a long-term change in our video game assortment," Walmart spokeswoman Tara House said. The company maintained its stance that it will not stop selling firearms.
Keywords: earnings, results, quarterly results, Q2, guidance, analyst commentary, earnings watch