Fly Intel: What to watch in Walmart earnings report

Walmart (WMT) is scheduled to report results of its fourth quarter before the market open on Tuesday, February 19, with a conference call scheduled for 8:00 am EDT. What to watch for: 1. OUTLOOK: Walmart previously raised its fiscal 2019 EPS view to $4.90-$5.05 and narrowed its net sales view to up about 2%, but cut its EPS outlook at its investor meeting in October to $4.65-$4.80. In its November earnings report, Walmart again raised its FY19 EPS outlook to $4.75-$4.85. The current Street forecast for FY19 EPS stands at $4.84 on revenue of $514.33B. 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." Baird analyst Peter Benedict said he expects Walmart's Q4 earnings to be solid, and expects guidance to remain intact, although he recognizes the uncertainty with Flipkart as the result of new regulations in India. 2. HOLIDAY SEASON: Jet.com's holiday weekend was "truly horrible," with sales down 6% on Thanksgiving and Black Friday and a 39% plunge on Cyber Monday vs. last year, BuzzFeed News reported, citing data from market research firm Edison Trends. According to the data, Target.com (TGT) sales increased 48% on Thanksgiving and Black Friday and 19% on Cyber Monday, Amazon (AMZN) increased by 25% on Black Friday and Thanksgiving and 17% on Cyber Monday, and Jet.com parent Walmart.com increased sales revenue by 23% on Thanksgiving and Black Friday and 32% on Cyber Monday. In late December, Amazon said that it had a "record-breaking" holiday season with more items ordered worldwide than ever before. Amazon customers shopped at record levels from a wide selection of products across every department, it said. 3. COMPETITION: Retailers like Walmart have been hurt by an increase in online shopping on sites like Amazon rather than at brick-and-mortar stores. Walmart is seeking to create a big ad business to rival that of Amazon, Bloomberg reported, adding that it has hired executives from NBC (CMCSA) and CBS (CBS) to help bolster its advertising business. Walmart has also launched a private-label furniture brand, called MoDRN, which is "a direct hit to big furniture retailers" such as Wayfair (W) and Ikea and a challenge to rival Amazon, Erica Pandey wrote for Axios. 4. FLIPKART: Bernstein analyst Brandon Fletcher said that India has been bandying about restrictive e-commerce regulations this past year, and finally pulled the trigger despite protestations from both Walmart and Amazon. The new rules put a damper on 1P selling models, pricing discounts, supplier exclusives, and supplier shares of sales above 25%, all of which are important to both companies' planned models. While not significant to Walmart's total revenues, the analyst believes it does put a damper on its long-term growth potential in the market through Flipkart and raises the question of where Walmart will make up that growth. Morgan Stanley analyst Simeon Gutman said Flipkart's losses will likely rise due to new e-commerce regulations in India and Walmart investors "can't ignore Flipkart" as it once again becomes a bigger part of the retailer's investment narrative.