Wal-Mart Stores, Inc. (WMT) Warns Of Lower Earnings

Wal-Mart Stores, Inc. (WMT) Warns Of Lower Earnings

Wal-Mart Stores, Inc. (NYSE:WMT) warned that its financial results for the fourth quarter and fiscal 2014 will be lower than previously expected due to impact from discrete items.

Wal-Mart EPS guidance

Charles Holley, chief financial officer of Wal-Mart Stores, Inc. (NYSE:WMT) said the retail giant is anticipating that its fourth quarter earnings for fiscal 2014 will be slightly below the low end of its guidance range of $1.60 to $1.70 per share.

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For the full fiscal 2014, Wal-Mart Stores, Inc. (NYSE:WMT) is also expecting that its EPS will be at or slightly below its low end guidance range of $5.11 to $5.21 per share.

In a statement, Holley said, “Today, we are providing updated information on previously disclosed items, as well as new additional discrete items that were not anticipated when we provided our fourth quarter and full year guidance. These discrete items will impact EPS results for the fourth quarter and the year.”

Discreet items

According to Wal-Mart Stores, Inc. (NYSE:WMT) its fourth quarter and fiscal 2014 earnings were negatively affected by store closures in China and Brazil. The retail giant is closing approximately 50 underperforming stores in both countries, which should result in an impact of $0.11.

The retail giant also terminated franchise and supply agreements related to retail stores in India. The company expects an impact of approximately $0.05 from this transaction.

Including other related expenses such as non-income tax contingencies and employment claim contingencies in Brazil, lease expense charges in China, and Sam’s Club U.S. restructuring and club closures, the total impact on its financial results is estimated to be around $0.26 per share.

Other updates

The pending sales transaction of Walmart de Mexico for the Vips restaurant business is still subject to regulatory approval. The deal is now expected to close in the first quarter of 2015. Wal-Mart Stores, Inc. (NYSE:WMT) previously expected to complete the deal in the fourth quarter this year. According to the retail giant Vips is recorded as discontinued operations and estimated that its future gain from the sale will be around $0.06 per share.

In the United States, Wal-Mart Stores, Inc. (NYSE:WMT) expects that the comparable store sales of Walmart U.S. and Sam’s Club without fuel will be slightly negative to the guidance provided in the previous quarter.

Holley explained that comparable store sales of the WalMart U.S. and Sam’s Club were affected by the eight winter storms that resulted to store closures during the quarter. In addition, Walmart U.S. was also affected by the reduction in the supplemental nutrition assistance program (SNAP) of the government.

Wal-Mart Stores, Inc. (NYSE:WMT) will release its detailed fourth quarter and full year financial results on February 20, 2014 at 7:00 in the morning Eastern time.

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