Yahoo Finance Walmart and Target Report Very Different 2Q16 Earnings
Walmart and Target Ring Up Divergent 2Q16 Earnings
Walmart’s (WMT) performance in 2Q16
Walmart (WMT) released its 2Q16 results on August 18, 2015. The quarter ended July 31, 2015. Walmart generated sales of $120.2 billion in the quarter, ahead of consensus Wall Street analyst estimates of $119.3 billion. Walmart’s revenue was spurred by improved performance in the United States with higher traffic and store comps (comparables).
Sales headwinds
Walmart’s international sales were severely impacted by the higher US dollar. The adverse forex (foreign exchange) impact reduced the top line by $4.2 billion. As a result, Walmart’s consolidated sales were almost flat compared to the comparable quarter of the previous year. We’ll have a more detailed analysis of Walmart’s and Target’s sales performances in Parts 2–6 of this series.
Earnings comparisons
Walmart’s adjusted EPS (earnings per share) fell short of expectations at $1.08 for 2Q16, missing the consensus estimate of $1.124. EPS was also down 10.7% over 2Q15. The impact of a higher dollar, wage increases for associates, higher-than-expected shrinkage, and digital investments all took their toll on the bottom line.
Target (TGT) declared its second quarter results on August 19, a day after Walmart. Target came in ahead of Wall Street estimates on both earnings and sales expectations. Target’s adjusted EPS rose 20.6% over the prior year to come in at $1.22 in 2Q16. Higher store comps and outperformance in core signature categories such as health and wellness, and babies and kids were primarily responsible for the company’s upbeat results.
On September 29, Costco (COST), the third major mass merchandiser, will declare full-year results for the fiscal year ending August 31, 2015. Costco reported EPS of $1.17 in 3Q15, up 9.3% over the previous year.
Stock market impact
Walmart’s results proved highly disappointing for investors. The stock fell 3.4% on August 18 to $69.48. In Part 9 of this series, we’ll look at Walmart’s stock performance and relative valuations compared to its peers Costco (COST), Target (TGT), and Kroger (KR). We’ll also see how recent market volatility has affected the performance of Walmart stock.
Walmart makes up ~2.8% of the portfolio holdings of the SPDR Dow Jones Industrial Average ETF (DIA) and 0.6% of the holdings of the SPDR S&P 500 ETF (SPY).
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