Wal-Mart Stores, Inc. (WMT) Q1 Earnings: Profits Disappoint

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Wal-Mart Stores, Inc. (NYSE:WMT) reported earnings Thursday that just missed the Wall Street expectations, helped by low traffic in US stores resulting in a decline in the retailer’s revenue.

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Wal-Mart Stores Earnings Details

For the first quarter, the retail giant posted adjusted earnings of $1.14 per share compared to $1.09 per share in the prior year-ago period. Revenue for the quarter was up marginally from the $113.02 billion a year ago to $114.19 billion. After accounting for currency effects, revenue stood at $113.4 billion. Analysts expected earnings of $1.15 per share on revenue of $115.78 billion.

Same store sales, of those opened for at least a year was down 1.4 percent against analysts expectations of 0.1 percent decline. Net sales at Wal-Mart Stores, Inc. (NYSE:WMT) international grew by 2.9 percent to $33.0 billion, gaining market share in the majority of the markets it operates in.

During the quarter, the retailer repurchased approximately 30 million shares for $2.2 billion and paid $1.6 billion in dividends. As was announced earlier, the company increased the dividend by 18 percent for fiscal 2014 to $1.88 per share.

For the quarter, Wal-Mart Stores, Inc. (NYSE:WMT) reported a free cash flow of $1.9 billion a decline from $3.1 billion in the prior year. Factors responsible for the fall in free cash flow include an increase in income tax payments due to new rules for federal bonus depreciation and increase in capital expenditure.

For the current quarter, the discount retailer expects earnings to come in a range of $1.22 to $1.27 compared to $1.18 in the year ago quarter.

Management Take

Mike Duke, Wal-Mart’s CEO consider the results to be “solid”, and says the mission was ” simple and focused — to help people save money so they can live better.”

“Frankly, we had a more difficult quarter than expected when we announced our guidance in February,” CEO said. It is noteworthy that Wal-Mart Stores, Inc. (NYSE:WMT) U.S, despite adverse conditions, was able to register growth across several key categories, he added.

Factors responsible

The results reflect a general trend of low spending after the holiday season. However, Wal-Mart Stores, Inc. (NYSE:WMT)’s weak sales can also be attributed to higher payroll taxes and a delay in filing income tax refunds. Along with this, an extended cold weather delayed the purchases of spring items, like gardening supplies.

Following the earnings announcement, the shares of the retailer drop by 1 percent in the in extended-hours trading.

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