Wal-mart (WMT) Tops Q3 EPS by 3c; Adjusts FY14 EPS Outlook

November 13, 2014 7:03 AM

Wal-mart (NYSE: WMT) reported Q3 EPS of $1.15, $0.03 better than the analyst estimate of $1.12. Revenue for the quarter came in at $118.1 billion versus the consensus estimate of $118.37 billion.

Walmart U.S. comp sales increased 0.5 percent for the 13-week period ended Oct. 31, 2014. Comp sales for the Neighborhood Market format increased approximately 5.5 percent. Walmart U.S. net sales increased $2.3 billion, or 3.4 percent, to approximately $70.0 billion.

"Walmart reported solid earnings per share of $1.15 in the third quarter," said Doug McMillon, Wal-Mart Stores, Inc. president and CEO. "The highlights for the quarter include the positive comp in Walmart U.S., including the strong performance from Neighborhood Markets, the 21 percent increase in e-commerce sales globally and the profit performances from Sam's Club and our International business."

McMillon stressed the need to strengthen Walmart's sales growth and improve the customer experience, both in stores and online.

"We're investing in key areas of our business, including wages in our U.S. stores and in e-commerce and mobile capabilities. We continue to see opportunities to improve our business," he added. "Being the price leader is an ongoing priority for us and a commitment to customers. As with every year, that is even more important during the holiday season. We have some things in our favor this fourth quarter, including lower fuel prices in the U.S. and other key markets, and we're set to deliver for customers during this time."

Guidance

"Our earnings per share guidance assumes several important factors, including the economic conditions in several of our largest markets, and a highly promotional holiday season," said Charles Holley, executive vice president and chief financial officer. "As a reminder, our full year EPS guidance includes the four factors we discussed last quarter, which were higher U.S. health-care costs, incremental investments in e-commerce, ongoing investments in Sam's Club, and our effective tax rate. We anticipate our full year effective tax rate will range between 32 and 34 percent.

"While historically our tax rate tends to moderate toward the end of the fiscal year, it is important to remember that assessments of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits and the impact of discrete items could affect our rate," added Holley. "We are monitoring progress in Congress with respect to the extension of certain U.S. income tax legislation that expired at the end of calendar year 2013, which if not passed, could drive our effective tax rate toward the high end of our estimated range for the full year."

Wal-mart sees Q4 2014 EPS of $1.46-$1.56, versus the consensus of $1.57.

Wal-mart sees FY2014 EPS of $4.92-$5.02, versus prior guidance of $4.9-$5.15 and the consensus of $4.99.

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