Wal-Mart’s Q3 Earnings In Line, Sales Beat; View Narrowed

After six weak quarters in a row, Wal-Mart Stores Inc.’s (WMT – Analyst Report) third quarter fiscal 2015 earnings came in line with estimates, while revenues were better-than-expected. The company however narrowed its guidance for fiscal 2015.

Walmart’s fiscal third quarter 2015 adjusted earnings of $1.15 per share matched the Zacks Consensus Estimate and increased 0.9% from the year-ago earnings of $1.14 per share. Positive comps at Walmart U.S., improved performances in Sam’s Club and the international business and a lower-than-anticipated tax rate contributed to earnings, which remained within management’s guidance range of $1.10 and $1.20 per share.

Wal-Mart Stores, Inc – Earnings Surprise | FindTheBest

Quarter in Detail

Total revenue of the retailer increased 2.9% to $119.0 billion (including membership and other income) and beat the Zacks Consensus Estimate of $118.3 billion. The better-than-expected sales can be attributed to improvements in Sam’s Club and the International business, higher Neighborhood Market sales in the U.S. and strong e-commerce growth.

Sales were encouraging as the company delivered positive comp sales of 0.4% driven by relatively balanced growth in traffic and ticket. The positive comps came after the company posted weak results in the past six quarters due to a tough economic environment.

Total revenue comprised net sales of $118.1 billion (up 2.8% year over year or 3.1% on a constant currency basis) and membership and other income of $925 million (up 13.9% on a year over year).

On a constant currency basis, operating income declined 0.4% to $6.3 billion in the third quarter, due to a decline in gross margin.

Segment Details

Walmart U.S.: The segment posted net sales growth of 3.4% to $70.0 billion in the quarter, including the impact of fuel sales. Operating income, however, declined 1.2% to $4.93 billion.

U.S. same-store sales (comps) for the 13-week period ending Oct 31, 2014 increased 0.5% versus a decline of 0.3% in the prior-year quarter. This was the first instance of positive comps since the last seven quarters, despite food stamp benefits. Comp sales also exceeded the company’s expectations of flat comps. While comp traffic declined 0.7%, average ticket increased 1.2% in the quarter.