Walmart (WMT) is scheduled to report results of its third fiscal quarter before the market open on Thursday, November 14, with a conference call scheduled for 8:00 am EDT. What to watch for:
1. OUTLOOK: In August, Walmart forecast fiscal 2020 adjusted earnings per share guidance "down slightly to up slightly" vs. fiscal 2019. The retailer sees FY20 net sales growth around 3% in constant currency vs. its prior outlook of "at least 3%." It also forecast FY20 Walmart U.S. comp sales growth toward upper end of its 2.5%-3% range. The company said it expected currency to be a continued headwind in Q3. In October, Walmart said it sees a pre-tax charge to its earnings of about $2.2B on the Asda pension buy-out. Baird analyst Peter Benedict said he senses an "upward bias" to EPS expectations given the company's "solid" Q2 comps, trends improving across the quarter and several initiatives to help sustain momentum. While he expects some sequential moderation in U.S. comps during Q4, Benedict thinks consensus expectations already reflect this and believes continued progress on expenses suggest good support for consensus Q4 EPS expectations.
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 year 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. In September, Walmart said it planned to expand "Delivery Unlimited" grocery to 1,400 stores this fall. Nomura Instinet analyst Michael Baker said that Walmart is well positioned to take advantage of a favorable consumer backdrop but can also outperform in a weaker economic environment based on its "defensive" profile.
3. FIREARM, E-CIGARETTE SALES: Walmart said in September that it plans to dramatically step back from gun sales following two deadly shootings at Walmart stores over the summer. The retailer announced plans to discontinue sales of short-barrel rifle ammunition, discontinue sales of handgun ammunition, and discontinue handgun sales entirely in Alaska. It is also asking shoppers to no longer openly carry firearms in stores, in states where "open carry" is allowed, unless authorized law enforcement officers are present. In a memo distributed to employees, CEO Doug McMillon commented that "We believe the opportunity for someone to misinterpret a situation, even in open carry states, could lead to tragic results." Later in the month, Walmart said it will stop the sale of e-cigarettes in stores as a rash of mysterious deaths linked to vaping draws intense scrutiny. Walmart said that "Given the growing federal, state and local regulatory complexity and uncertainty regarding e-cigarettes, we plan to discontinue the sale of electronic nicotine delivery products at all Walmart and Sam's Club U.S. locations." Walmart added that it "will complete our exit after selling through current inventory."
Walmart
-0.26 (-0.22%)
Amazon.com
-9.75 (-0.55%)