Editor’s Note: The author has added Walmart Q4 revenue figures on a constant currency basis — which ignore exchange rate fluctuations — for context, and at the request of a PR firm that rang him on his personal cell phone.
This earnings season can be a cathartic time for retailers, who can typically expect the best three months of sales in their fiscal year.
Alas, Wal-Mart Stores, Inc. (WMT) earnings, when they were announced this morning, were not cathartic at all.
WMT stock fell swiftly on Thursday, losing more than 5% right out of the gate. Investors were expecting better from Wally World, which took in less revenue than expected in the fourth quarter and also issued disappointing first-quarter guidance.
Oh, and its e-commerce investments aren’t paying off too well.
Although Walmart is still easily the world’s largest public retailer by revenue, Amazon.com, Inc. (AMZN) is growing so explosively that it’s only a matter of a few years before the Seattle e-commerce giant catches up.
It should come as no shock that WMT stock is in the dumps today; every time Walmart underperforms while Amazon keeps growing, the day where Walmart passes the torch comes closer and closer.
WMT Can’t do it Online
What makes Amazon so special? Its dominant presence online is the main thing, although Prime member benefits such as free two-day shipping, Prime Video, Prime Music and many other benefits are also major selling points.
What makes WMT so special? It’s ubiquitous and sells cheap stuff.
Walmart knows that it’s getting its butt kicked by AMZN online, so it’s been investing heavily in building out its digital presence. Unfortunately, the fruits of that labor are nowhere to be seen: Online sales grew 10% in Q3 and only 8% in Q4. Amazon, by comparison, saw revenue soar 28% in the holiday quarter.
But wait! The WMT earnings report had more bad news: Revenue came in at $129.7 billion, down 1.4% year-over-year and lower than the $130.76 billion, 0.6% decline analysts expected. On a constant currency basis, revenue was up 2.2% to $134.4 billion.
Guidance was disappointing as well. WMT now sees flat fiscal year 2017 revenue, down markedly from the 3% to 4% growth it had previously predicted. That’s probably the most damning figure out of the whole report; after all, investors like to hear about, “What can you do for me in the future?” rather than, “What have you done for me lately?”
On the bright side, same-store sales growth came in at 0.6% in the period, and while it doesn’t meet the 1% consensus growth figure, it’s positive. Also, earnings per share were modestly better than expected, coming in at $1.49 vs. expectations for $1.46 per share.
Bottom Line After WMT Earnings
Great, WMT earnings didn’t disappoint on one metric. It doesn’t change what Walmart is at its core: A behemoth in decline. The fourth quarter was the sixth straight quarter of year-over-year EPS declines, and that trend is projected to continue for at least the next four periods.
WMT stock didn’t look like a buy before earnings. And it doesn’t look like one after, either.
This is a clear-cut case: No reason to own Walmart shares.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
