Wal-mart (WMT) Approves $20B Buyback, Sees FY19 EPS Up 5%
Walmart (NYSE: WMT) will host its annual meeting for the investment community today where the company will discuss progress against its strategic initiatives to leverage its unique assets and win with customers and shareholders through innovation, greater convenience and speed. The company is also sharing select guidance information for the next fiscal year.
Walmart President and CEO Doug McMillon will provide an update on how the company is uniquely positioned to win.
“We have good momentum in the business, we’re executing our strategy and moving with speed to win with the customer, who is more connected than ever and embracing tools that will save them both time and money,” said McMillon. “We’re combining the accessibility of our stores with eCommerce to provide new and exciting ways for customers to shop. I’m proud of the team we have in place, the work we have underway and how we are positioned for success in the future.”
McMillon will discuss accomplishments over the past year at Walmart U.S., including traffic and comp sales improvements, strong eCommerce growth and expanded online assortment, two-day free shipping with no membership fee and over 1,000 online grocery pickup locations. He will also highlight innovations around the world such as one-hour delivery from stores in China, commitments to sustainability, service to communities, especially in times of disaster, and investments in associates that are empowering them to drive results and better serve customers.
“We’re proud of the progress we’re making,” McMillon said. “We’re equipping our associates with training and technology so they will continue to innovate in our stores, clubs and through eCommerce to find ways to deliver an enjoyable shopping experience for our customers that is easy, fast, friendly and fun.”
1 Fiscal year 2018 GAAP EPS guidance excludes the impact of any additional charge on extinguishment of debt in fiscal 2018 expected to be associated with the debt tender offer announced on October 6, 2017, as well as the impact of other strategic decisions that could occur during fiscal year 2018.2 See additional information at the end of this release regarding non-GAAP financial measure.3 Assumes currency exchange rates remain at current levels.
Financial Framework
Walmart CFO Brett Biggs will discuss financial projections through the lens of the company’s financial framework of strong, efficient growth, operating discipline and strategic capital allocation.
Biggs commented, “We feel good about where we are as a company. Our plans are designed to win with both customers and shareholders as we operate within our financial framework. Our financial position is strong, which allows us to invest in the business while returning significant cash to shareholders.”
Additional Fiscal Year 2019 Guidance
- Consolidated net sales are expected to grow at or above 3 percent, driven by comp-sales and eCommerce growth, assuming currency exchange rates remain at current levels
- Anticipates sales growth at Walmart U.S. eCommerce to be about 40 percent
- Expects to add 1,000 online grocery locations in Walmart U.S.
- Expects to leverage expenses
- Expects its effective tax rate to be approximately 32.5 percent
Capital Expenditure Details1
The company expects capital expenditures to be approximately $11 billion for fiscal years 2018 and 2019.
- Walmart U.S. will continue to prioritize store remodels and digital experiences over new stores.
- eCommerce investments include enhanced supply chain capabilities.
- In addition to new stores, Walmart International will invest more in fulfillment capabilities.
New Unit Details
The company expects global unit growth of approximately 280, including new, expanded and relocated units, for each of the fiscal years 2018 and 2019.
- Walmart U.S. expects to open fewer than 15 Supercenters and fewer than 10 Neighborhood Markets in fiscal year 2019.
- Walmart International expects to open approximately 255 new stores with a focus in key markets such as Mexico and China.
Adjusted EPS Guidance
Adjusted EPS Guidance is considered a non-GAAP financial measure. Management believes that Adjusted EPS Guidance for Fiscal 2018 is a meaningful metric to share with investors because that metric, which adjusts EPS for certain items recorded in the period, is the metric that best allows comparison of the expected performance for Fiscal 2018 to the comparable prior period. In addition, the metric affords investors a view of what management is forecasting for Walmart's core earnings performance for Fiscal 2018 and also affords investors the ability to make a more informed assessment of the core earnings performance for the comparable period.
We have calculated Adjusted EPS Guidance for Fiscal 2018 by adjusting for the amount of the impact of: (1) the Q2 loss on the early extinguishment of certain debt and (2) the gain on the sale of Suburbia in Mexico.
| Fiscal 2018 | |||||||||||||
| Diluted net income per share: | |||||||||||||
| Forecasted EPS | $4.18 - $4.28 | ||||||||||||
| Adjustments: | Pre-TaxImpact | TaxImpact1 | NCIImpact2 | Net Impact | |||||||||
| Loss on Early Extinguishment of Debt3 | $0.26 | -$0.09 | $— | $0.17 | |||||||||
| Gain on Sale of Suburbia | -0.13 | 0.04 | 0.04 | -0.05 | |||||||||
| Net adjustments | $0.12 | ||||||||||||
| Adjusted EPS Guidance | $4.30 - $4.40 | ||||||||||||