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Walmart (WMT) Q4 profit misses estimates, guides FY21 below view

Walmart Inc. (NYSE: WMT) reported a 12.3% growth in earnings for the fourth quarter of 2020 helped by other gains and a decline in income tax provision. However, the results missed analysts’ expectations. Further, the company guided revenue growth and earnings below the consensus view for fiscal 2021.

Net income increased by 12.3%. However, adjusted earnings declined by 2% to $1.38 per share. Revenue rose by 2.1% to $141.7 billion. Analysts had expected EPS of $1.43 on revenue of $142.49 billion.

Looking ahead into fiscal 2021, the company expects consolidated net sales growth of around 3% in constant currency. The earnings are anticipated to be $5.00-5.15, up 1.5-4.5% compared with last year’s adjusted EPS. The consensus estimates EPS of $5.22 on revenue growth of 3.20% for the full year.

Comparable sales growth is predicted to be at least 2.5% excluding fuel at Walmart US, and at least 3% excluding fuel and tobacco at Sam’s Club. For fiscal 2021, Walmart’s US e-commerce net sales growth is projected to be around 30% while Walmart’s international net sales growth is predicted to be around 4% in constant currency.

For the fourth quarter, Walmart’s US comp sales increased on a two-year stacked basis by 6% with continued strength in food and consumables. Walmart’s US e-commerce had strong growth in grocery pickup and delivery, and online grocery was a meaningful contributor to e-commerce growth.

The results were hurt by softer-than-expected holiday sales up to Christmas in the US stores while the new year started off well for the company. In the US, the strength in grocery, health & wellness, home, and electronics were partially offset by softness in toys, media & gaming, and apparel during December.

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Pharmacy comp sales benefited from branded drug inflation and an active flu season. However, the company believes the compressed holiday season, softer toy industry sales, a lack of newness in gaming, and some assortment challenges in apparel contributed to the decline in general merchandise.

Sam’s Club comp sales rose 0.8% and e-commerce sales grew 33%. Reduced tobacco sales negatively impacted comp sales by about 300 basis points. In Walmart International, the company experienced positive comp sales in six of 10 markets, including the major markets of Mexico, China, and Canada. Concerns over Brexit in the UK and unrest in Chile negatively impacted performance in International.

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Categories: Earnings Retail
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