Amazon No Longer Has The Upper Hand On Walmart

Wal-Mart Stores, Inc. (WMT) Consumer Discretionary – Food & Staples Retailing | Reports May 19, Before Market Opens

Key Takeaways

The Estimize consensus is calling for earnings of 89 cents per share on $112.73 billion in revenue, 1 cent higher than Wall Street on the bottom line and right in line on the top

Walmart’s biggest threat over the past 5 years has come from Amazon

Walmart’s business model as a discount retailer has transformed into a one-stop shop including gas stations, pharmacies and groceries at brick and mortar stores, as well as a burgeoning online platform

What are you expecting for WMT? Get your estimate in here!

The world’s largest retailer, Wal-Mart, is scheduled to report earnings tomorrow, before the market opens. Retail has been largely disappointing this season and with Target (TGT) missing their estimates this quarter, Walmart might be in for a world of hurt. Earnings and revenues have been mixed for quite some time as wage increases, currency headwinds, and fierce online competition take their toll. The holiday season featured better than expected earnings per share while revenue fell short. This has been a consistent theme in the retail sector and should resonate with Walmart this quarter.

The Estimize consensus is calling for earnings of 89 cents per share on $112.73 billion in revenue, 1 cent higher than Wall Street on the bottom line and right in line on the top. Compared to a year earlier this represents a 13% decline in profitability with sales falling as much as 2%. On average the stock remains relatively unchanged around earnings season. Shareholders will have to look elsewhere to reconcile the 20% losses the stock have experienced in the last 12 months.

It’s no secret that Walmart’s business model as a discount retailer is slowly eroding at the hand of Amazon (AMZN). Amazon continues to be Walmart’s biggest threat and is showing no signs of retreating anytime soon. In an effort to fend off online rivals and even brick and mortar retailers such as Costco, Wal-Mart has invested heavily to improve the customer experience, lower prices and boost ecommerce sales. This is expected to push profits down 12% this fiscal year, which is particularly concerning considering operating income decreased 11.2% in FY2016.