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Walmart Slides After Cutting Sales Growth Guidance, Blames Strong Dollar
The chorus of companies complaining against the Fed's strong dollar policy just saw one more addition, when moments ago WalMart- which reported better than expected numbers but disappointing guidance - said that "like many other global companies, we faced significant headwinds from currency exchange rate fluctuations."
A quick look at the numbers: the EPS of $1.61 was a beat to expectations of $1.54. Of course, the GAAP EPS of $1.53 would have been a miss but let's ignore that. Let's also ignore that that WMT's tax rate in the quarter was 29.5%, which compared to the 33% paid to Uncle Sam a year ago, is what allowed it to beat EPS. Perhaps the only unadjusted silver lining in the WMT results was the increase in comp store sales ex-fuel which rose by 1.6% versus the 0.8% expected. This compares to -0.4% a year ago. Oddly enough, WMT also said that the impact of fuel prices on Sam's Club comp stores was a whopping -2.4%. Did gas prices somehow soar in Walmartland without anyone getting the memo?
Anyway, that covers the good news. Now the bad, which again are mostly in the projection area and all mostly due to the soaring dollar.
To wit:
"Along with these significant investments, we expect ongoing headwinds from currency exchange rates during the year. We also consider economic conditions in our various markets and our estimated tax rate in establishing our guidance ranges for the year," added Holley. "After evaluating these factors, we are forecasting earnings per share for the full year of fiscal 2016 to range between $4.70 and $5.05. For the first quarter, EPS will range from $0.95 to $1.10."
This guidance compares to $1.10 per share Walmart reported for the first quarter of fiscal 2015 and $4.99 per share for the full year. In addition, Holley said that if currency exchange rates remain where they are today, this would cause a negative impact to fiscal year 2016 net sales of approximately $10 billion, as well as a negative impact on operating income of around $0.10 per share.
Thank the Fed's "strong dollar" policy:
"Given the potential impact of currency headwinds, we expect that our fiscal year 2016 sales growth will be between 1 and 2 percent, versus the 2 to 4 percent we provided at our October investor conference," said Holley. "Our capital expenditure guidance of $11.6 billion to $12.9 billion, which includes investments for stores and e-commerce, remains unchanged. Our net square footage store growth target, excluding future acquisitions, remains unchanged at 26 to 30 million square feet for this year."
So to summarize:
- Q1 EPS: $0.95-$1.10 vs Wall Street estimate of $1.14
- 2016 sales growth of 1-2% vs 2-4% previously
- And Full Year EPS of $4.70 - $5.05 vs Wall Street estimate of $5.19.
End result, despite WMT announcing it would increase its quarterly dividend from $0.48 to $0.49, below the $0.50 expected, this:
That's what happens when you don't surprise Wall Street pleasantly with a boost in your buyback program. As for the strong USD, check to you, Janet Yellen.
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The first law suit against a Central bank has arrived...
Portugal’s Central Bank Sued Over Banco Espírito Santo LoanThe Fed has a strong dollar policy?
Coulda fooled me.
Sorta like a strong EBT policy.
Walmart is the canary in the coal mine.
and here I thought the Ma and Pa stores were the canary in the coal mine
Perhaps we overlooked the dying canaries and now the miners are dropping?
Since Walmart imports crap from Asia and sells it in the USSA wouldn't their profits go up with a strong dollar?
Need more Food Stamp Barry I guess.
Walmart forgot to read the "Everything is awesome" memo from Barry.
Foreign earnings are affected because it's now less in USDs. Also China's currency has barely moved against the USD which means WMT has seen little benefit from a stronger USD.
Stop looking behind the curtain.
My thoughts exactly. Stronger dollar equals more purchasing power when buying from foreign nations.
Maybe Wal Mart is converting their "profits" into another currency offshore to avoid tax liablilities.
In the USA, purchases from Asia would be cheaper but internal costs would be in US dollars... the bottom line is marginally more profit from USA operations IF gross sales are the same of higher.
From their overseas operations where profits are returned to WALMART USA... they take a loss due to exchange rate. There remains an larger incentive to oversea any and all expenses.. at the expense of USA workers and subcontractors.
BigJim,
There are 2 buckets of currencies out there against one of them, dollar is stronger and against the other bucket it is weaker.
In the first bucket are currencies such as EUR, JPY, GBP, ZAR, BRL, AUD, CAD, RUB, SGD, MYR etc, all of which are weaker due to their own fundamentals (be it sanctions, printing money aka QE, weakest commodity prices in decades, weak oil, deficits etc).
In the second bucket of currencies are the stronger ones against the dollar such as CNH/CNY, DKK, CHF and since the past 1 year and only the past 1 year is INR.
Because DXY, the dollar index which the idiotic MSM media like Bloomberg, WSJ, FT and all others suck to is linked to the first bucket hence they keep telling the sheeple that Dollar is strong.
However, that is completely untrue.
Dollar is only strong against the weakest. Against the equals like Chinese yuan or Swiss Franc or gold or Danish Krone it is weakest for several years.
Currencies are always a reflection of trade and interest rate and deficit comparison between 2 nations. Comparing a currency such as a USD to just one bucket of currencies while ignoring the other is idiotic and shows weak understanding of finance/economics. But, if brain dead idiots are produced in Yale, Princeton or Harvard, then what can I say!
Also, the formulas are made for a reason, so that everything seems so complex that no one questions it.
Thanks. But that was my point ;-)
I know..but I had to educate the Princeton post graduates and all the journalists out there. Everyone, except you :)
Yeah, but how is that in-store Walmart Bank working out?
As Mitch Hedberg would say --- "I am against picketing, I just don"t know how to show it!"
What will they do? Print off garbage to pay the lawsuit or give back assets they stole in the first place? And no banker gets handcuffed? Probably a class C misdemeanor lol.
Law suit?! That's funny.
Call me when the guillotines show up.
The banksters need to repay us.
Um, since the vast majority of WalMart's sales are domestic, a strong dollar should result in a lower COGS and higher margins or lower prices. I call BS on this one....
Yeah, I thought the strong dollar made imports cheaper and shit. Again, I am not an economist.
Ignorance is strength.
A little more than half of all global Wall Mart employees work is the US serving the waddling, bargain seeking masses.
http://news.walmart.com/walmart-facts/corporate-financial-fact-sheet
Walmart handicap spots are still filled all the time with those purple Escalades so things cant be that bad.
algos dont care. all they are about are the words that are used....whether they make (logical) sense or not.
Hahaha, it's not about a strong dollar but a weak CONSUMER! Liars!!
I think the standard Walmart patron has now started shopping at 99 cent stores. And we thought People of Walmart was a shock. We are about to go to a new level.
Miffed
Currently building the "people of dollar stores".
Exactly!!! They are a fucking wholesaler for imports!!!! they love the strong dollar, so much so that everyone is getting a raise!!!
The less sense it makes, the more it must be accepted as the gospel truth. Economics is less of a science and more of a religion.
This ^^. Strong dollar = cheaper crap from China = higher sales and better margins.
Agreed,
Strong dollar means more purchasing power against all imports, exports on the other hand....well we don't really export products anyway. We export war and dollars or inflations. Though that will probably mean more profits to corporations rather than better deals for the commoner.
Maybe profits fell cause ppl are waking the hell up and seeing them for what they are. But they would never say that. Next thing you know they will say, "profits are down just like stocks cause oil is cheap" although ppl have more money to buy goods from it not going to gas.
"Divert Deflect Deceive Deny"
OMFG!!!!!! Sell! Sell! Sell!!!
"Blames Strong Dollar"
Whatever. Weather, floods, volcano, summer,etc.
Sunspot, baby.
'Welcome to WalMart....I love you'
'Welcome to WalMart....Fuck you, I'm spending other people's money'
better lobby to up the EBT limits
"blames strong dollar"?!?!?!
What the fuck does Walmart actually manufacture and export again?
Manufacturing employment is their chief export. Again, I am no asshat economist.
Morbid obesity.
Great news for the medical device and pill popper folks.
Apparently US businesses do not understand that if the dollar is increasing relative to another currency where they operate, that they must raise prices.
So when they collect that current currency and bring it home in doilars, they have fewer.
This masks inflation in those nations that have weaker currencies, and it gives the CBs the idea that they can go even lower with their currency.
And it hurts the earnings for the US company.
In the end, it's just another form of wealth transfer, from US Corporations to the rest of the world courtesy of the Federal Reserve Bank.
How can the U.S. company be "hurting" if, as you say;
"In the end, it's just another form of wealth transfer, from US Corporations to the rest of the world courtesy of the Federal Reserve Bank."
Only one of the statements can be true.
In the "new normal" any and all statements can be true, false or both all the time.
Wal-mart's profit margin of 3% does not scream success.
Don't you know millions of Chinese travel thousands of miles to buy stuff they made back from a Walmart in Randomville USA?
My choice to not shop at Wal-Mart did not have anything to do with the strong dollar, I assure you.
Fuck walmart and the creatures that shop there.
That reminds me... "Walking Dead" is on.
f*ck walmart
They have good ammo.
Looks like the Dow will be the first to tank - it's usually the RUT.
Thanks Walmart.
Start buying yellen.
Are you Yellen like a felon?
USD on track to correct as this January projection predicted... Will that be enough to save Walmart investors? Probably not.
http://www.globaldeflationnews.com/u-s-dollar-indexelliott-wave-update-f...
I wonder how much of that Walmart crap is stuck in a container off Long Beach. Could there be empty shelves in their future? Can't make money if you don't have any merch.
I want to thank the Saudis for their Strong US Dollar Policy!
The Fed opened a can of worms in 2008-09 that cannot be closed.
This is total Bullshit. It's just been too fucking cold for all of those fat cunts to make it to Walmart on their electric scooters. I was at Walmart yesterday and since the deep freeze set in, I've been able to shop the candy and snack isle without getting run over by Fatty Scooters running three wide down the isle. Polar Vortex Folks. Pent up demand coming as soon as the warm up comes. BUY WALLYWORLD STAWKS NOW!
HERE'S AN INTERESTING DEVELOPMENT.
But the Moline, Ill.-based company saw its stock rise more than 3% to $92.75 per share Thursday after investors learned that noted investor Warren Buffett’s Berkshire Hathaway had dramatically increased its holdings in the publicly traded Deere last year.
The Omaha-based Berkshire Hathaway now owns more than 17 million shares of Deere & Co., a significant jump from the 3.9 million shares it held in the second quarter of 2014.
Whether you drive a John Deere or just watch the stock markets, the Berkshire investment signals a vote of confidence in Deere’s ability to make it through the economic headwinds now facing the farm machinery industry.
I'm scratching my head on this. I farm.....and NO ONE IS BUYING FARM EQUIPMENT now with ag prices in the shitter and our 2015 incomes will be cut in half. I guarantee you not many Canadians or farmers in the north will be buying since Butt Fuck Buffet shut down grain shipments with his railroad deal.
Fuck you Warren Buffet.
That is interesting, since most farmers that have been hard green all these years, have all started buying Case-IH tractors, and combines.
The farmer who farms the property across from me, bought a 48' soybean planter last year, and went heavy into soybeans - between 6,000 and 7,000 acres. He had the dealer come out, and calibrate the machine - and less than 25% of his seed grew due to improper seed depth. The whole crop went to insurance.
Have a blessed day.
They're definately playing to the Banker crowd and the dumb and dumber consumer there as well as thier over seas busisness. Once again fuck the American middle class, that by the way made that fucking company, as they hint at the need for more QE. Absolutely disgraceful, almost as bad as when they asked their employes to contribute their earnings to their personal super PAC.
Walmarts answer.........give everyone a few extra peanuts to hopefully boost its image. Be interesting to see walmarts shelves if the dockworkers keep striking. Walmart is china you know.
I don't do twitter,
But your Walmart is China comment could gain momentum. #WallmartisChina
See Liberals like to follow what is fasionable. "Conservatives" (which has nothing to do with actually being conservative anymore) have mutated into being in opposition to liberals.
But the hashtag could actually work on both.
Those Right Wing idiots (don't get your panties in a wad left wing are idiots too) chanting "Merica do not like China (or any other country for that matter), maybe a fucking light bulb may come on in that malnutritioned brain of theirs and they will decide, hey Walmart ain't "Merica, it is a few rich white collar folk and China...
Boycott Wally World, Shop Local.
And by local i don't mean the closest store to you. Locally owned businesses. If you live in a town, your Wallmarts have turned downtown into ghostown. shame
Walmarts answer. . . . give everyone a few extra fucking peanuts PROVIDED BY THE FED to hopefully boost its image.
Still amazes me how you ask most people do you know what the "ring of death" around your local wal mart is? Or how your local mayor, city council, etc were bribed into giving that company free sewer service, tax cuts just so that they could run local busisness out? In our small town they just opened 3 more local market stores at once in order to garner every damn retail dollar they can. I'll pay extra and go elsewhere, those guys need to swing as far as I'm concerned.
I assume that misinformation and distraction with a dose of laziness is the cause for no concern. In larger cities, Walmart cannot get authorization or permits to develop within a certain radius downtown. Ppl would also be totally pissed. So they have set their sites on rural America.
All the poor people are saving instead of shopping with their strong dollars.
Marissa Meyer on Walmart new minimum wage via Twitter:
"So happy for @Walmart associates and proud of @Walmart mgmt. A great leadership decision by Doug McMillon".
Are you fucking kidding me? 9 USD an hour minimum wage? Working 34h/week (which is "full time status" in Wal Mart) 52 weeks per year this amounts to a yearly gross salary of barely 16'000 USD. A perfect case of working poor. So this is supposed to be something positive?
Marissa Meyer "happy" for associates? proud" of management? "great leadership decision"? WTF.
Marissa Meyer is a yahoo.
WalMart should be considered a domestic enemy. It has done more to destroy America and Americans in the last 30 years than any other entity other than the u.s government. By retailing the goods made by u.s manufactures offshoring their production and the middle class jobs that went with them it made the impoverishment and enslavement of Americans possible. They now utilize this job shortage as a means to hire the jobless at low wages. This forces the people on government handouts making them slaves to both government and corporations.
went to TGT for the first time in ages to drop a whopping $3.99 for beach sandals. Three people in line at both registers. The sales people were very nice, I'll go back again when these sandals break.
But what about this that says WM profits up and they're giving raises to 500k employees?
http://www.nytimes.com/reuters/2015/02/19/business/19reuters-walmartstor...
Up is down. Down is up.
BTFD. BTFATH.
In other news, the chocolate ration will be increased from 30 grams to 20 grams this month.
Walmart is a symptom.
The banksters need to repay us.
Helen Robson was Jewish.
Time to create more part time jobs by terminating full time jobs.
2 for 1, anyone?
Wal-mart shows revenue en earnings growth in a challenging retail environment with currency headwinds and everyone loses their minds!!!
If it wasnt for foodstamps, ebt and other social programs . . . corporations like walmart would be out of business.
Walmart is living proof that capitalism works... even in a comunist country . . . ^^ an entire business model centered around farming slums on government life-support.
Chinese Walmart -
http://thechive.com/2015/02/19/the-things-sold-at-chinese-walmarts-will-...