Wal-Mart Stores’ full fiscal year revenue fell 0.7% to $482.13 billion, with net income of $14.694 billion down 9.2% compared to fiscal year 2015. Although sales were up 3.6% in its U.S. stores, fourth quarter income and revenue fell below market estimates.
The company reported early Thursday (Feb. 18) fiscal year per share net income of $4.57, below the $4.58 consensus estimate of the 21 analysts who cover the company. The full year revenue also missed the consensus estimate of $483.38 billion.
For the retailer’s all important fourth quarter that ended Jan. 31, revenue was $129.887 billion, down 1.4% compared to the same quarter in the previous fiscal year, and below the estimate of $130.96 billion.
Net income in the quarter was $4.574 billion, down 7.9% from the same quarter in fiscal 2015. Per share net income of $1.43 missed the consensus estimate of $1.46. The fourth quarter income included a 20 cents per share loss to cover costs of closing 269 stores.
The Bentonville-based global retailer also saw its cash position – combination of cash and cash equivalents – fall 4.7% in the fiscal year to $8.705 billion.
SEGMENT SALES, HIGHLIGHTS
Fiscal year sales were up in one of the retailer’s three segments.
Walmart U.S.
FY 2016: $298.378 billion
FY 2015: $288.049 billion
up 3.6%
Walmart International
FY 2016: $123.408 billion
FY 2015: $136.16 billion
down 9.4%
Sam’s Club
FY 2016: $56.828 billion
FY 2015: $58.02 billion
down 2.1%
Such numbers are not a complete surprise. Wal-Mart officials have said the next several years will be a challenge as the company boosts spending on wages, training and e-commerce initiatives. The company reported an 11.2% decrease in operating income during the full fiscal year, with much of the decline coming from the wage and technology costs.
In Thursday’s report, the company pointed to several areas of improvement.
• Comp sales at Walmart U.S. were positive for the sixth consecutive quarter, up 0.6%. Neighborhood Market comps increased approximately 7%.
• Walmart International net sales were $32.7 billion on a reported basis, but were up 3.3% to $37.4 billion on a constant currency basis.
• E-commerce sales during the year were up 12% on a constant currency basis.
• Again, on a constant currency basis, total revenue for the fiscal year was up 2.8% to $499.4 billion.
• The company paid out $10.4 billion to shareholders through dividends and share repurchases.
“We had a solid fourth quarter to close out our fiscal year, with adjusted EPS of $1.49. We are seeing momentum in our Walmart U.S. business as we continue to lap positive comps, and our international business is healthy and growing,” Wal-Mart Stores CEO Doug McMillon said in the earnings report. “We are pleased with fundamental trends that are allowing us to improve our stores, add critical capabilities and deepen our digital relationships with customers. Our initiatives are making it simpler and more convenient for customers to shop at Walmart.”
EARNINGS GUIDANCE
Company officials also used Thursday’s earnings report to downplay expectations for the new fiscal year. Continued costs related to wages and training are estimated to lower full year net income by 30 cents per share. Currency exchange rate changes may reduce total sales by $12 billion during the fiscal year.
More important, the company lowered its net sales growth estimate to “relatively flat” compared to previous guidance of a 3%-4% gain.
“This change reflects the impact from recently announced store closures globally, as well as the continued strengthening of the U.S. dollar. Excluding the impact of currency and store closures, our net sales growth guidance would have remained in the 3 to 4 percent growth range,” the company noted.
Shares of Wal-Mart (NYSE: WMT) closed Wednesday at $66.11, up 21 cents. During the previous 52 weeks the share price has ranged from an $84.86 high to a $56.30 low.
