Wal-Mart Q4 Profit Beats View, But Outlook Disappoints

(RTTNews) - Retail giant Wal-Mart Stores, Inc. (WMT) on Thursday reported a 12 percent increase in profit for the fourth quarter, due mainly to increased traffic at its U.S. stores recorded during the holiday season.

Adjusted earnings for the quarter beat analysts' expectations, while revenues fell short of estimates. Looking ahead, the company has forecast first-quarter earnings below Street expectations and also lowered its full-year revenue outlook.

Wal-Mart also said it will raise wages for about 500,000 full-time and part-time associates at Walmart U.S. stores and Sam's Clubs in the first half of the current fiscal year.

During the fourth quarter, Walmart U.S. continued its momentum with net sales growth of 4.1 percent, and positive comparable store sales of 1.5 percent, excluding fuel. Wal-Mart noted the fourth quarter as the first positive traffic comp. recorded since the third quarter of fiscal year 2013.

Sam's Club net sales grew 1.3 percent, with comparable sales, excluding fuel, increasing 2.0 percent. Operating income grew faster than sales at 19.4 percent, excluding fuel.

However, Walmart International net sales declined 3.9 percent, while operating income surged 66.4 percent. On a constant currency basis, net sales would have increased 3.6 percent.

The world's largest retailer's net income for the fourth quarter was $4.97 billion or $1.53 per share, up from $4.43 billion or $1.36 per share in the year-ago quarter.

Results for the quarter include a charge of $0.05 per share for a wage and hour litigation matter and another charge of $0.03 per share for Walmart Japan store closures. The prior-year quarter's results include a negative impact from discrete items totaling $0.26 per share.

Underlying earnings from continuing operations for the latest quarter were $1.61 per share, compared to $1.60 per share in the year-ago period. On average, 26 analysts polled by Thomson Reuters expected the company to report earnings of $1.54 per share for the quarter. Analysts' estimates typically exclude special items.

Wal-Mart's total revenues for the fourth-quarter increased 1.4 percent to $131.57 billion from $129.71 billion in the year-ago period, but fell short of analysts' consensus estimate of $132.36 billion.

Net sales rose 1.4 percent from last year to $130.65 billion, and included a negative currency exchange rate impact of about $2.63 billion. Membership and other income declined 0.5 percent from the year-ago period to $915 million.

For fiscal year 2015, Wal-Mart's net income rose to $16.36 billion or $5.05 per share from $16.02 billion or $4.88 per share in the previous year. Underlying earnings for the year were $5.07 per share, compared to $5.11 per share last year.

Total revenue for the year rose 2 percent to $485.65 billion from $476.29 billion in the prior year.

Street expected the company to report earnings of $4.99 per share for the year on revenues of $486.62 billion.

Looking ahead to the first quarter, Wal-Mart has forecast earnings in a range of $0.95 to $1.10 per share. Analysts currently expect the company to earn $1.14 per share for the quarter.

For fiscal year 2016, Wal-Mart has forecast earnings of $4.70 to $5.05 per share.

The company lowered its fiscal year 2016 sales growth to a range between 1 percent and 2 percent, from the range of 2 percent to 4 percent growth the company provided at its October investor conference. The revised sales outlook reflects the potential impact of currency headwinds.

The Street currently expects the company to earn $5.19 per share for the year on 2.2 percent increase in revenues to $497.22 billion.

Wal-Mart said its guidance also reflects additional strategic wage and training investments for U.S. associates that were announced today, as well as incremental investments for Global eCommerce initiatives, totaling between $0.26 and $0.29 per share.

Wal-Mart's board of directors approved an annual cash dividend for fiscal year 2016 of $1.96 per share, a 2 percent increase from the $1.92 per share paid last fiscal year.

The fiscal year 2016 annual dividend of $1.96 per share will be paid in four quarterly installments of $0.49 per share.

WMT is trading at $84.12, down $2.17 or 2.51 percent, on a volume of 5.31 million shares.