Yahoo Finance Will Higher Store Traffic Boost Walmart’s 3Q16 Same-Store Sales?
Will Walmart Beat Analyst Expectations, Earnings Outlook in 3Q16?
Wall Street’s sales expectations for Walmart in 3Q16
Walmart’s (WMT) sales are expected to come in at ~$117.9 billion in 3Q16, according to consensus Wall Street analyst estimates. That’s a decline of 0.87% compared to 3Q15, largely due to the currency factors mentioned in the last article. Walmart has beaten the market consensus sales projections in two of its last four quarters.
Walmart’s US segments power sales in 1H16
Walmart’s performance in the United States has been stronger than the company’s overall average. Total revenue in 1H16 has grown 3.1% year-over-year to $172.4 billion compared to a marginal decline in overall sales to about $235 billion.
Same-store sales
Walmart’s same-store sales for both Walmart US and Sam’s Club have trended positive this fiscal year, largely boosted by higher store traffic. Store comps came in at 1.5% and 1.3% for Walmart US and Sam’s Club, respectively, in 2Q16.
The improving labor market and lower gas prices have benefited store traffic trends. However, average ticket size growth hasn’t quite seen the same upside, as US consumer spending has remained cautious. In 3Q16, Walmart’s US sales are likely to continue to benefit from these factors.
In contrast, peers Publix Super Markets (PUSH), Sprouts Farmers Market (SFM), and Dollar General (DG) reported store comps of 4.1%, 5.1%, and 2.8%, respectively, in their most recently reported quarters.
Potential headwinds
Walmart still needs to address the issue of rising shrink levels that are affecting its top line. Its pharmacy sales are also likely to feel the pinch of declining reimbursements, a factor that’s affecting the entire industry.
Some of Walmart’s peers have reported comps declines, including Whole Foods Market (WFM) and Fresh Market (TFM). Same-store sales for Whole Foods Market fell by 0.2% in the quarter ended September 27, 2015. This was the first comps decline for the organic foods retailer since 2009. Higher competition in the organic foods space and more premium products were largely responsible.
Walmart makes up 0.5% of the portfolio holdings of the SPDR S&P 500 ETF (SPY) and 1% of the SPDR S&P Retail ETF (XRT).
Same-store sales for Walmart (WMT) have historically been boosted by the strong performance in its e-commerce sales channel. We’ll take a look at that in the next article.
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