Walmart downgrades guidance for fiscal 2020 following a downbeat performance in Q4

Walmart downgrades guidance for fiscal 2020 following a downbeat performance in Q4
  • Walmart downgrades guidance for fiscal 2020 following a downbeat performance in Q4.
  • Walmart prints $141.67 billion in quarterly revenue versus the analysts' estimate of $142.9 billion.
  • Walmart made $1.38 of earnings per share in Q4 versus the analysts' estimate of $1.43.

Walmart revealed its Q4 earnings report on Tuesday that missed analysts’ estimates attributed to weakened demand for apparel, toys, and video games in the holiday quarter. The American multinational retail corporation also gave its guidance for fiscal 2020 that came shy of the expectations. As per the retailer, e-commerce growth is expected to lose pace this year. It also highlighted that the potential impact of the recent outbreak of Coronavirus in China is not yet accounted for in the current guidance.

Walmart’s spokesperson also associated the worse than expected results to the ongoing protests in Chile that have disrupted operations for the retailer. Despite the poor performance results, however, Walmart was last reported trading 1% higher.

Walmart’s Figures Versus Analysts’ Estimates

According to Refinitiv, analysts had expected the retailer to generate $142.9 billion in revenue in the fiscal fourth quarter. The estimate for earnings per share was recorded at $1.43. In its earnings report on Tuesday, Walmart missed the estimates on both fronts and noted $141.67 billion in quarterly revenue (2.1% growth) while it claimed to have made $1.38 of earnings per share in the recent quarter. Walmart’s revenue in 2018’s Q4 was capped at $138.79 billion.

Experts had also anticipated Walmart’s same-store sales to rise by 2.3% in the fourth quarter versus a much lower 1.9% that was posted in the earnings report on Tuesday.

In the quarter that ended on January 31st, Walmart boasted $4.14 billion of net income versus $3.69 billion in the same quarter last year. Additionally, the retailer faced approximately $110 million hit to its operating income due to the political unrest in Chile. The company also announced a 15-cent charge ascribed to income tax affairs and another 15-cent to business restructuring.

Walmart’s Guidance For Fiscal 2020

In its guidance for full-year, Walmart anticipated a decline in its earnings to $5.0 – $5.15 per share. Refinitiv, on the other hand, accentuated analysts’ estimate for full-year earnings at $5.22 per share.

Walmart stores’ transactions in the United States were reported 1% up in the fourth quarter versus a higher 1.5% increase in the same quarter in 2018. While ticket growth was announced at 2.6% in Q4 last year, it was posted much lower at 0.9% in the recent quarter.

At the time of writing, Walmart is trading at $119.63 per share that marks less than 1% of growth in 2020 so far. In contrast, Walmart’s annual gain in 2019 was printed at around 25%.

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.
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