This morning (Thursday), the world's largest retailer Wal-Mart Stores Inc. (NYSE: WMT) reported disappointing fourth-quarter earnings before opening bell. A challenging retail environment, foul weather, and recent restructuring kept Wal-Mart from meeting Wall Street expectations.
This is the fourth time in the last nine quarters the retail superstore notched an earnings miss. WMT stock dropped $0.48 per share (0.64%) in pre-market trading on the news, and it's down to 2.91% per share as of 9:45 a.m. EST. Historically, its stock averages a 1% loss in the week following earnings.
Wal-Mart earnings per share (EPS) were $1.34, down from $1.67 the same quarter a year ago; it had been projected to report EPS of $1.37.
For the full fiscal year 2014, Wal-Mart delivered EPS of $4.85 – a 2% increase over fiscal 2013's EPS of $5.01, but missing Wall Street expectations of an EPS between $5.11 and $5.21 per share.
The brightest news for Wal-Mart this morning was the company's global online sales and acquisitions, which topped $10 billion (a 30% increase compared to last year).
"We will continue to grow our global business by focusing on customers and serving them how they want to be served," Walmart Chief Executive Officer Doug McMillion said with earnings release this morning. "Improving store sales figures will be a priority, and we'll focus on being even stronger item and category merchants, delivering value and improving our service levels. We'll remain focused on our expense structure, and innovate to improve productivity and aid our ability to deliver everyday low prices."
Despite McMillion's optimism, recent signals from Wal-Mart management itself signaled today's miss.
On Jan. 31, Wal-Mart slashed its guidance for fiscal 2014.
"We now anticipate that our underlying EPS for the fourth quarter of fiscal 2014 will be at or slightly below the low end of our range of $1.60 to $1.70," Wal-Mart chief financial officer Charles Holley said. "For the full year, we expect underlying EPS to be at or slightly below the low end of our range of $5.11 to $5.21."
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The dropped guidance has to do with weak U.S. retail sales, at least in part – Wal-Mart's top line has suffered due to cautious consumer spending, both in the United States and abroad.
U.S. retail sales account for 70% of economic activity, and it unexpectedly fell 0.4% for the month of January.
Last week, the U.S. Commerce Department reported that Americans are spending less on clothing, restaurants, and motor vehicles. Retailers experienced soft holiday sales at the end of 2013, and the report even retroactively downgraded November and December retail sales numbers.
On top of the struggling retail environment, Wal-Mart is experiencing some upheaval.