Wal-Mart’s Q2 Earnings: What Are We Expecting?

Wal-Mart (NYSE:WMT) is scheduled to announce its second quarter results on Thursday, Aug 18. The company started the year on a strong note, with its first quarter revenue and earnings per share beating analyst estimates despite currency fluctuations and increasing wage expenses. The retailing giant’s net revenues increased 4% year over year (y-o-y) on a constant currency basis to $119.4 billion, while it posted earnings of $0.98 per share, which was above the top end of the company’s guidance.

Wal-Mart’s e-commerce growth rate has been steadily declining over the last few quarters. The company’s e-commerce sales grew by just 7% in the first quarter of fiscal 2017 (Feb-April 2016), whereas the overall U.S. e-commerce market grew by almost 15%. We expect the trend to continue in the second quarter as well.

In a bid to expand its e-commerce business in the U.S., Wal-Mart recently agreed to acquire web retailer Jet.com in a deal valued at $3.3 billion. In addition, Wal-Mart revamped its ShippingPass delivery subscription program, wherein customers can sign up to receive unlimited two day shipping for $49 per year, against competitor Amazon’s $99 per year Prime service. These cumulative efforts should enable the retailer to increase its presence in the e-commerce market in the coming quarters.

In the upcoming earnings, we expect strong top line growth for the company driven by a rise in store traffic due to expansion of Wal-Mart Pay and strong sales in its grocery division. Wal-Mart expects its earnings per share to range between $0.95 and $1.08. It also expects comparable sales for Wal-Mart U.S. to grow by about 1.0%. Reuters’ compiled analyst estimates forecast revenues of $120 billion and earnings of $1.02 per share in Q2, in line with guidance.

Have more questions about News Corp? Please refer to our complete analysis for Wal-Mart  

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