Walmart Earnings Show Strength, but Guidance Confirms Payroll Tax and Tax Refund Woes for Consumers

Companies and Brands

Published: February 21, 2013 7:20 am

Wal-Mart Stores Inc. (NYSE: WMT) is out with earnings. The world’s largest retailer spooked the markets recently with an internal memo about sales starting out very soft, but here is a look at the most recent quarter and at the formal guidance ahead.

Earnings per share (EPS) came to $1.67 and sales were $127.1 billion. This includes the company’s key Christmas quarter. Thomson Reuters had a consensus estimate of $1.57 EPS and sales were expected to be $128.7 billion. Sales in the comparable period a year ago came to $123.17 billion. Walmart said that same-store sales in the quarter were up 1.3%, which is down from the mid-point of a prior range given of 1% to 3%.

The guidance ahead is soft. For the coming quarter, EPS were put at $1.11 to $1.16, versus estimates of $1.18. For the year ahead, the company said EPS would range between $5.20 and $5.40, and that includes increased fiscal 2014 costs of around $0.09 per share for its e-commerce operations. Thomson Reuters was expecting earnings of $5.37 per share.

Here is the key quote that sums up the woes impacting the company:

We are confident that our low prices will continue to resonate, as families adjust to a reduced paycheck and increased gas prices. We see the underlying health of the Wal-Mart U.S. business is sound, and sales trends are similar to what we’ve demonstrated in the last few quarters. However, February sales started slower than planned, due in large part, to the delay in income tax refunds. We began seeing increased tax refund check activity late last week in our stores, resulting in a more normalized weekly sales pattern for this time of the year. Due to the slower sales rate in the first few weeks of this year’s first quarter, we are forecasting comp sales for the 13-week period from Jan. 26 to Apr. 26, 2013 to be around flat. We continue to monitor economic conditions that can impact our sales, such as rising fuel prices, changes in inflation and the payroll tax increase.

Walmart closed at $69.21 on Wednesday, against a 52-week range of $57.18 to $77.60.

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