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Walmart Q4 Profit Misses Estimates; Lowers FY19 Sales Growth Outlook

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Walmart Inc. (WMT) reported fourth-quarter adjusted profit per share of $1.33 compared to $1.30, prior year. On average, 29 analysts polled by Thomson Reuters expected the company to report profit per share of $1.37 for the quarter. Analysts' estimates typically exclude special items. The company said it is currently analyzing the accounting impact of the Tax Act, but its analysis is incomplete. As a result, Walmart has recorded a provisional benefit of $207 million for the fourth quarter.

Fourth-quarter consolidated net income attributable to Walmart declined 42.1% year-over-year to $2.18 billion. Earnings per share was $0.73 compared to $1.22. Fourth-quarter GAAP EPS was negatively impacted by a number of discrete items totaling $0.60. Consolidated operating income was $4.5 billion, a decrease of 28%. The company noted that excluding the impact of discrete charges, fourth-quarter operating income would have decreased less than 1.0 percent.

Fourth-quarter total revenue was $136.3 billion, an increase of 4.1% from previous year. Excluding currency, total revenue was $135.1 billion, an increase of 3.1%. Analysts expected revenue of $134.91 billion, for the quarter. Net sales at Walmart International were $33.1 billion, an increase of 6.7%. Excluding currency, net sales were $31.9 billion, an increase of 2.8%.

Walmart U.S. comp sales increased 2.6%, and comp traffic increased 1.6%. On a two-year stack, comp sales growth was 4.4%. The company reported that nine of eleven markets posted positive comp sales during the fourth quarter, including four largest markets. Sam's Club comp sales, excluding fuel, increased 2.4% led by comp traffic growth of 4.3%. eCommerce sales were up 23% during the quarter.

Doug McMillon, Walmart President & CEO, said: "Walmart U.S. eCommerce sales growth in the fourth quarter was 23 percent, down from 50 percent in the third quarter. The majority of this slowdown was expected as we fully lapped the Jet acquisition as well as creating a healthier long-term foundation for holiday. A smaller portion of the slowdown was unexpected, as we experienced some operational challenges that negatively impacted growth."

For fiscal 2019, the company projects: EPS in the range of $4.75 to $5.00 (an increase from the guidance given in October), including a benefit of approximately $0.05 from currency based on current rates; and consolidated net sales growth in constant currency of 1.5% to 2.0% (previous guidance was, 'at or above three percent'). Walmart U.S. eCommerce sales growth is targeted to be approximately 40%. Comp sales growth for the 52-week period ending Jan. 25, 2019 are expected to be: Walmart U.S. (ex. fuel): at least 2.0%; and Sam's Club (ex. fuel & tobacco): 3.0% to 4.0%.

The Board of Walmart approved an annual cash dividend for fiscal year 2019 of $2.08 per share, an increase of 2 percent from previous fiscal year. The fiscal year 2019 annual dividend will be paid in four quarterly installments of $0.52 per share.

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