Walmart (WMT) reported Q4 non-GAAP EPS of $1.33 (GAAP $0.73), missing consensus est. of $1.37 if more than $1.22 a year ago, largely thanks to the company’s plunging tax rate (Q4 at 21.6%, down 9.2%) on revenue of $136.3BN, also above the est. of $134.83BN, and up 4.1% from the $130.9BN a year earlier (the number includes $1.12BN from membership and other income, down 5.8% y/y). For the full fiscal year 2018, total revenue was $500.3 billion, an increase of $14.5 billion, or 3.0%.

More disappointing was Walmart’s Q4 gross profit, which declined 61bps to 24.1%, even as the company’s effective tax rate tumbled 917bps to 20.3%.  Furthermore, gross merchandise volume (a measure of all the goods it sells online) rose 24% in 4Q vs 54% in 3Q;

Also disappointing was Walmart slower Q4 eCommerce sales, which rose only 23% in Q4, down from an average of 50% in the last three quarters. Walmart has been aggressively investing in its eCommerce business to catch up with Amazon, and the efforts had generally paid off until the current slowdown, even if online shopping still makes up only about 4% of the company’s nearly $500bn in annual sales. Looking ahead, the company hopes that eCommerce sales growth will revert back to “approximately 40%.”

But the biggest disappointment to investors is that despite reporting stronger than expected US comp sales of 2.6%, beating expectations of 2.0%, Walmart guided full year 2019 EPS of $4.75-$5.00, well below the consensus estimate of $5.13.

Some more details on the fourth quarter ended Jan 31:

  • Walmart U.S. comps. ex-fuel up 2.6%, est. up 2.0%; forecast up 1.5%-2.0%
    • Wal-Mart U.S. traffic up 1.6% y/y, avg ticket up 1.0%
    • Wal-Mart U.S. E-commerce sales up 23% y/y, GMV up 24%
  • Sam’s Club comps. ex-fuel up 2.4%, est. up 1.9% (CM, avg of 19); co. saw up 1.5%-2%
  • Sam’s Club traffic up 4.3%, avg ticket down -1.9%

    • Commenting on the results, WMT CEO Doug McMillon said that “we have good momentum in the business with solid sales growth across Walmart U.S., Sam’s Club and International. We’re making real progress putting our unique assets to work to serve customers in all the ways they want to shop, and I want to thank our associates for their great work this past year. We’re making decisions to position the business for success and investing to win with customers and shareholders.”

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