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Why Walmart and Target Released Updated Guidance for Fiscal 2016

Walmart’s and Target’s Fiscal 3Q16 Performance, Earnings, Outlook

(Continued from Prior Part)

Walmart’s guidance for fiscal 2016

Walmart (WMT) expects to see positive store comp (comparable) (XRT) (XLP) trends continue in the last quarter of fiscal 2016. Same-store sales are expected to increase by 1% for Walmart US and by 0%–1% for Sam’s Club. However, due to currency headwinds, reported sales are expected to stay flat in fiscal 2016 and rise by 3% in constant currency terms.

Walmart also raised the lower end of its earnings guidance for fiscal 2016. It now expects reported EPS (earnings per share) to come in at $4.50–$4.65 versus $4.40–$4.70 projected at its fiscal 2Q16 earnings release.

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In fiscal 4Q16, EPS is expected to be $1.40–$1.55. The adverse full year forex (foreign exchange) impact, however, is expected to be higher, at $0.16 per share versus $0.15 projected earlier. The updated guidance doesn’t include the impact of store closures or other business exits.

Target’s guidance

Target (TGT) is expecting adjusted EPS to come in at $4.65–$4.75 compared to its prior estimate of $4.60–$4.75. Fourth quarter adjusted EPS is expected to range from $1.48–$1.58.

According to Target’s CFO (chief financial officer) Cathy Smith, same-store sales are expected to come in at 1%–2% in 4Q16, with fiscal 2016 comps from 1.5%–2%. However, the company’s e-commerce sales are expected to see a slowdown, with growth projected at 20% in fiscal 4Q16 compared to 29% in the first three quarters of fiscal 2016. This is also lower than the 40% growth rate projected by the company over the long haul.

Supermarket chain Kroger (KR) released higher earnings projections for fiscal 2016 at its last earnings release in September. It’s now expecting EPS to range from $1.92–$1.98 in fiscal 2015, higher than its earlier estimate of $1.90–$1.95 released in June. Same-store sales are now expected to come in at 4%–5%, up from 3.5%–4.5%.

Continue to Next Part

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