What To Watch In Walmart's Earnings Report

Walmart (WMT) is scheduled to report results of its first fiscal quarter before the market open on Tuesday, May 18, with a conference call scheduled for 8:00 am EDT. What to watch for:

1. GUIDANCE: In February, Walmart forecast fiscal 2022 earnings per share flat to up slightly including divestitures on consolidated net sales up in the low single digits excluding divestitures. Analysts currently expect EPS of $5.41 and revenue of $547.34B. Net sales, operating income and EPS are expected to decline in FY22 primarily due to the impact of anticipated divestitures, Walmart said in February. U.S. comp sales for the fiscal year are seen up low single digits excluding fuel. The company also forecast Q1 EPS flat to slightly up vs. last year, which compares to analysts' current consensus of $1.21.

In February, Walmart forecast Q2-Q3 operating income and EPS down mid to high single digits, with Q4 operating income and EPS potentially up mid to high single digits.

2. 'CHALLENGES' AT WALMART+: A 100-page memo sent by Walmart in February, which was viewed by Recode, highlighted its struggles to overcome competitors like Amazon (AMZN), Instacart, and Target (TGT) while also hinting at challenges the company's subscription service, Walmart+, has faced retaining new members, according to Recode's Jason Del Rey. One slide that included logos of competitors including Publix, Target, and Albertsons (ACI) stated, according to Del Rey, that "Grocery, the growth engine of the business, is losing share rapidly."

Cowen analyst Oliver Chen says the firm's Consumer Tracker survey suggest Walmart+ members in March may have declined to 11.1M from 13M in February and that the addressable market and usage rates may have also plateaued in the near-term. The implied decline could be based Walmart managing customer satisfaction, controlling demand through marketing, U.S. reopening, and testing-reading-reacting to ensure long-term success, the analyst said.

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