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Wall Mart Beats on Earnings, Provides Cautious Outlook

The world’s largest retailer benefited from lower tax rates and says higher gas prices might hurt sales in the first quarter of 2013

By Antonio Perez
Epoch Times Staff
Created: February 21, 2013 Last Updated: February 21, 2013
Related articles: Business » Companies
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Customers exit a Wal-Mart store in Miami, Fla., in this file photo. Wal-Mart, the world’s largest retailer, beat Wall Street’s forecast for earnings Feb. 21, 2013, but not for revenue. The company provided a cautious outlook for the first quarter of the new fiscal year. (Joe Raedle/Getty Images)

 

Wal-Mart Stores Inc. reported better-than-expected fourth-quarter earnings Feb. 21. The world’s largest retailer beat estimates, partially aided by a lower tax rate, that led to record net-income. 

For the first quarter of fiscal year 2014, however, the company provides a cautious outlook.

“Wal-Mart topped off a really good year with a solid fourth quarter, and I’m proud of what we accomplished as a team,” said Mike Duke, Wal-Mart president and CEO, according to the Wal-Mart News Archive.

The company reported earnings per share of $1.67 compared to consensus estimates of $1.57. This was in part due to a lower-than-expected tax rate.

Revenues for the fourth quarter missed expectations, coming in at $127.1 billion versus $128.5 billion expected.

Most investors, however, were curious at to what the company’s outlook would be, after some leaked internal emails indicating that February sales were a “total disaster,” according to Bloomberg News. 

“The worst start to a month I have seen in my 7 years with the company,” reads an Feb. 12 internal email by Jerry Murray, Wal-Mart’s vice president of finance and logistics, quoted by Bloomberg.

“That points to our competitive landscape, which means everyone is suffering and probably worse than we are,” said Bill Simon, president and CEO of Wal-Mart U.S., during a February meeting, according to Bloomberg.

The official outlook for the first quarter of FY 2014 was less dramatic but still cautious. 

“February sales started slower than planned, due in large part, to the delay in income tax refunds,” said Simon in Wal-Mart News. He added that expected sales would be “around flat” compared to the first quarter of FY 2013. Another factor cited by Wal-Mart was higher gas prices that hurt consumer income in the beginning of calendar year 2013.

Despite the cautious outlook, shares gained 2.4 percent to $70.87 in early afternoon New York trading. Bank of America Merrill Lynch analysts think that the stock is attractively priced. 

“We continue to believe WMT [Wal-Mart] shares remain attractive trading at less than 12x our F15E EPS [full-year 2015 earnings per share estimate] of $5.80,” the bank wrote in a report.

 




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