Estimize | Aug 18, 2016 12:12AM ET
Wal-Mart Stores (NYSE:WMT), Consumer Discretionary - Food and Staples Retailing | Reports August 18, Before Market Opens
Key Takeaways
Walmart is prepared to announce its fiscal second quarter earnings early Thursday morning. The world’s largest retailer is coming into its report on a high note after agreeing to purchase Jet.com for $3.3 billion earlier this month. This marks the largest purchase to date of an e-commerce startup.
Clearly the move is intended to help WMT catch up with online giant Amazon which continues to outpace the overall retail sector. That isn’t to say Walmart is doing poorly. The company is coming off a better than expected first quarter with expectations for another one tomorrow.
Analysts at Estimize are calling for earnings per share of $1.04, 4% lower than the same period last year. That estimate has increased 3% since Walmart’s most recent report in May.
Revenue is anticipated to come in flat at $120.35 billion, consistent with the improving trends in the retail environment. Shares are up 18% year to date but historically have declined by 1% following a report.
Last quarter online sales rose a sluggish 7%, consistent with the slowdown over the last year. Along with boosting online sales the company is focused on creating a better customer experience and lowering prices even further. These initiatives might generate sales but it will also pressure margins.
Walmart’s biggest advantage over Amazon and other online retailer is its expansive grocery and fresh food offerings. Walmarts are often considered one stop shops for families to do their weekly grocery shopping and to pick up anything else they might need.
The adoption of these services amongst online retailers have yet to gain traction. Amazon is of course testing this out as part of its Amazon Prime services. In the meantime, Walmart, Target Corporation (NYSE:TGT) and Costco (NASDAQ:COST) will have the upperhand in this segment.
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