Wal-Mart Earnings: What to Watch

Wal-Mart WMT -0.59 % Stores Inc. will report second-quarter financial results for fiscal 2017 before the market opens on Thursday. Here is what you need to know:

EARNINGS FORECAST: Analysts see earnings per share of $ 1.02, according to Thomson Reuters, down from $ 1.08 a year ago.

REVENUE FORECAST: Analysts estimate $ 120.37 billion in revenue, little changed from $ 120.22 billion a year ago.

WHAT TO WATCH:

–Profit Forecast: Wal-Mart is expected to update its full-year financial guidance, as it often does in the second quarter. Analysts expect a slight upgrade of the outlook. Wal-Mart has said profit could fall by as much as 12% this fiscal year as it invests in e-commerce, store improvements and labor. Executives have said second-quarter EPS would fall to between $ 0.95 and $ 1.08.

–Sales and Traffic: Wal-Mart has said second-quarter same-store sales would rise around 1%, the eighth consecutive quarterly increase. Traffic was forecast to rise for the seventh consecutive quarter. Both are signs that the retailer’s store improvements and labor investments are paying off. Last year, second quarter sales in existing stores rose 1.5%.

–Online Challenges: After more than a year of lackluster online sales growth, last week Wal-Mart announced plans to purchase discount e-commerce retailer Jet.com Inc. for $ 3.3 billion, the largest purchase to date of an e-commerce startup. Wal-Mart also tapped Jet’s founder Marc Lore to lead its e-commerce efforts once the deal is complete.

In June, Wal-Mart sold its Chinese online operations to JD.com JD -1.18 % Inc. The company’s moves show its executives feel the retailer needs a shake-up to compete with online giants Amazon.com Inc. AMZN -0.58 % globally and Alibaba Group Holding Ltd. BABA -0.52 % in China. In the first quarter Wal-Mart reported global e-commerce sale rose a sluggish 7%.

–Fresh food strength: Wal-Mart is trying to make its produce, meat and grocery business more top-of-mind for shoppers. The shift is at the heart of the retailer’s efforts to fend off Amazon because shoppers still tend to shop offline for fresh food and choose a grocery store largely based on the quality of fresh food. Wal-Mart is trying to improve its fresh supply chain so that produce lasts longer in customer’s homes.

It has also added a wider selection of higher quality choices, such as never-frozen salmon. But fresh food has been a longtime challenge for a retailer that started as a general merchandise store, not a grocer. Investors are watching for any meaningful share-shift in grocery.

Write to Sarah Nassauer at [email protected]


WSJ.com: US Business

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