Wal-Mart Stores Inc. Reported Lesser-Than-Expected Earnings For The Fourth Quarter

The retailer's stock decline as it announced lesser than expected earnings financial results for the fourth quarter, fiscal year 2016.

Wal-Mart Stores Inc. reported its fourth quarter earnings for fiscal year 2016 on Thursday. The 4QFY16 reported lesser than expected earnings for the quarter along with disappointing guidance for the upcoming quarter. After the report was announced, during the pre-market trading, the stock of the retailer plunged by 4.5%.

For the quarter, the retail corporation reported consolidated revenue of $129.7 billion; in comparison to the same quarter last year, it indicated a decline of 2.2% as the revenue reported back then was $131.billion. The profit during the quarter dropped by at least 8% due to which the company decided to lower its sales forecast for the current year. During the call, the retail giant also reported that it is planning on shutting down over 200 of its stores all across the globe.

The Bentonville based retailer has been trying far too long to gain back its share in the market which is increasingly dominated by the e-commerce giant Amazon. For the quarter, the sales growth grew by 8% as well mainly because the company maintained its focus on targeting online as well as mobile customers. But in the last twelve months, the sales growth has just been declining, despite that the fact that the retailer has been heavily investing in the business.

However in comparison to the first quarter of fiscal year 2016, the sales rose by as much as 26% in the fourth quarter while during the first quarter the sales rose by 15%. Diluted Earnings per share reported for the quarter were $1.43 with a net profit of $4.57 billion. In comparison to the same quarter last year, there has been a decline in the net profit as well, as the net profit initially was $4.96 billion, amounting to $1.53 per share.

In the retailer’s defense, the disappointing earnings reported was mainly due to the heavy investment the company made during the previous year in worker’s wages and renovating its stores. Additionally, Wal-Mart stores have also been hurt because of the stronger US dollar. Amazon and other online retailers are taking up too much of the market share and online customers – the largest retailer in the world is facing too many issues due to that as well. At this point there are more online shoppers than brick-to-mortar due to which the dominance is being threatened.

For the current quarter, (1QFY17) the company has forecasted an SSC increment of 0.5% and expects to achieve EPS of $4.00 to $4.30 per share which also indicates a decline of over 6% to 12% on an year over year basis. An annual cash dividend of $2 has been approved by the board of the company on the common stock; during the previous year the dividend was at $1.96 per share so it has increased by 2%.

Wal-Mart stock is being traded at a share price of $64.09 indicating a decline of 3.06% from its previous trading session. The price to earnings ratio presently is at $13.74 with earnings per share of $4.66. The market cap of the retailer is $205.86 billion.