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Walmart Stock Slides After EPS Miss, Profits Tumble, Full Year Guidance Slashed
It may not rely on such tech bubble (ver 1.0 and 2.0) buzzwords as eyeballs, clicks, "story", "sharing", "hyperxxxx, "non-GAAP" and so on, in fact with 2.2 million worldwide employees Wal-Mart is as old-school as it gets, which is why the fact that what was once the world's most valuable retailer (until Amazon dethroned it a month ago) just reported not only a miss, on tumbling operating earnings, but slashed its guidance by 7%, should be very troubling to anyone who still looks as such trivial things as "fundamentals" and how these reflect the even more trivial "economy."
This is what happened:
- Despite reporting revenue of $120.2 billion, or virtually unchanged from a year ago, and above the $119.7 billion expected, WMT reported EPS of $1.08, below the exp. $1.12. WMT promptly blamed exchange rates as the culprit for the $0.04 miss. Needless to say, when the dollar is weak no company ever says "EPS beat by $X.XX because of a favorable exchange rate."
- The first problem emerged when looking at operating income, which dropped by -10.0% consolidated, and tumbled by a whopping -14.2% in the firm's international stores.
- What was even more problematic is that while Wal-Mart reported a 4.8% increase in Net Sales in the US, rising to $74 billion, domestic Operating Income also tumbled by 8.2% to $4.8 suggesting there is a significant margin compression going on. Expect mass layoffs next as the company realizes that boosting minimum wages always has a profit trade off.
- Then there was the most important factor: free cash flow. "Free cash flow was $5.1 billion for the six months ended July 31, 2015, compared to $6.8 billion in the prior year. The decrease in free cash flow was due to lower income from continuing operations and the timing of payments."
- But the worst news for WMT shareholders, and the reason why the stock is down 3% pre-market is because the company slashed its guidance as follows: Walmart updated full year EPS guidance to a range of $4.40 to $4.70, from a previous range of $4.70 to $5.05. This range includes Q3 EPS guidance of $0.93 to $1.05.
But at least stock was being repurchased: The company paid $1.6 billion in dividends and repurchased approximately 14 million shares for $1.0 billion. Even if it means a few thousand less greeters...
Oh well, time to brush such old-economy behemoths as WMT aside, and focus on the "new economy" stalwarts such as AMZN, which may have a fraction of WMT's sales and profit, but at least it has a greater market cap. At least until investors realize that the secular decline in the US and Global economy as demonstrated by WMT is for real, and "stories" and "hype" can only carry you so far.
Full breakdown of WMT results:
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Recovery................................................NOT
When a corporation reaches a level of maturity where the best use of its surplus capital is to buy back its own stock then I'm afraid it's all downhill from there.
If the Federal Reserve is a real thing and interest rates move up from zero what happens to the weighted average cost of capital?
Are these corporations going to unwind their buybacks? Perhaps they will begin paying their employees in stock?
Not to mention the infiltration of the dreaded M.B.A.'s into the management structure.
No more real people who worked from the floor up, experience and loyalty replaced with a degree in sucking people dry.
Long lines at the register with half the lanes not open, loss leaders super cheap but stuff you need not that cheap or good, and the stores have become a social gathering place for the unwashed masses and ne'er-do-wells. Ick!
I feel sorry for the people who committed to the company back in the days of Sam Walton.
With 120 billion in sales walmart IS JUST FINE. They need to fix their inventory control systems and get those god damned shelves stocked. They need to close losing stores and drop losing products. But they will be fine. These are growing pains.
No so with department stores that have been losing sales for decades.
They are not paying thier vendors on time either. Creating new hoops to jump thru to get paid. As much as far back as April for some zhers , I will not mention
It's because of the hotter than usual summer and all that sun. There's always a reason.
Global warming! Moar regulation! Moar taxes!
I wonder how easily WMT could get into defense contracting? Endless supplies of greenbacks to those guys. Maybe they could take over the F-35?
… I thought they HAD
You're right! It's been sunny! No wonder people aren't buying!
We need a sunny weather tax immediately to offset this. People have been enjoying the sun for free all this time. Freeloading scum!
Gas is too cheap; can't drive anywhere.
In Houston, the politicians create a drainage tax during a drought.
"slashed its guidance by 7%"
nothing says "raise rates now!" like the nation's largest retailer "slashing" guidance.
(no /s needed, i hope)
"slashed its guidance by 7%"
But all the crap they buy from China .............................just got cheaper!
The food business from EBT/WIC/Food Stamp card is huge and those prices keep going up. People who actually pay for their own food pay twice with taxes to pay for EBT?WIC and price inflation from higher food demans caused by the free shit army.
New economy...blah blah...death of brick and morter...blah blah blah...greatest peacetime recovery ever...blah blah...rate hike in September...blah blah blah. /s
It's almost like listening to the adults on Charlie Brown cartoons anymore.
Why does Carl Quintanilla's face flash in my mind when I read your post?
amzn is worth a quarter of a trill
hahahahahahaha
What are retailers going to do when Americans, who have been loading up on toys for years, decide they want a Spartan empty house and screw all the crap. It then goes into garage sales, displacing sales of new stuff. Everyone gets what they want from each other, instead of the usual route. I've already got stuff neighbors have begged me to take for free, three weedwackers, three snowthrowers, three extra TV's (I swore I would never buy a flat screen TV, now I have two, given to me). I don't want the stuff, either. It all gets sold or given away. Then what?
Considering it's mostly throw away junk, I doubt very much people would want a half broken tonka truck with a wheel missing and that aged 'slime' that seems to coat those toys older than a year or two. TVs fair enough but all that other crap has a very limited shelf life. I've already decided on a spartan house, good quality furniture and a life away from stuff I want in favour of what I simply need. Less things bring you more contentment.
VERY FEW people will live a frugal lifestyle unless forced to. As soon as they have the next pay check it's off to the mall, or the truck dealer. Of course, they will NEVER consider saving for retirement or even a bad run of luck. This is just part of being a sheeple with no critical thinking skills.
Just continue to enjoy their cast offs at 10% of the cost or less.
Both my cars sleep in the garage every night. People try to give me shit all the time. I sell most of it as fast as I can. A clean garage is a lifestyle. It takes commitment.
three neighbors on my block, all with three car garages and park both their cars in the driveway because the garages are too full of shit. It's mind boggling. my cars sleep inside too and whenever shit piles up, it goes on craigslist, to goodwill/salvation army or out with the trash.
like the comment above, less stuff = more happiness
ETA: from one neighbor alone: leaf blower (needed a carb tune up, but he bought a new one), chainsaw (same thing), Weber charcoal grill (broken legs, i just used conduit to fix), ab-lounger, etc
I don't know about the rest of you, but Walmart is damn expensive now a days! We only buy paper and toiletries there and are shocked at the recent increases. Suggests to me that their numbers will decline more than forecasted.
As a side note: Walmart should start selling competitively priced shiny stuff. I know a bunch of people still buying and collecting shiny stuff.
Agree. Walmart was cheap 5 years ago, but something changed when the made an attempt at upscaling their products - a move they tried to reverse. Now they are no longer upscale or cheap, but just a bastard hybrid.
.......bullish for Waste Management.........here's a paired trade to go with the Walmart short.
It's either a larger economy problem, or a Walmart internal problem. Revenue beat, profit was down. Which do you think it was?
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Ok, but not from you....
When Wally Worlds hurtin', that's when you know Amerika is REALLY in trouble!
Beware Armageddon - like explosions near GM finished product storage lots.
This is obviously the result of a hugely successful recovery that has minimized demand for low priced and budget minded purchases. We now see the biggest demand in the luxury market due to phenomenal personal earnings growth as well as a record number of Americans (and almost Americans) who no longer need to work and can spend all their time shopping for new Maseratis. Further, our economic success has created a new surge in obesity which incentivizes on line shopping in lieu of more convention "foot traffic" traditional retailers rely on. Unfortunate collateral damage of our success.
It has to be true, for it has been told.
Staggering to me that even on ZH, people can't distinguish sales and profits. Sales were also up at Home Depot, you know, that place where all Maserati owners buy their caulk and machine screws.
We love inflation.
We feel richer by the day even if our quality of life is in decline.
No connection of dots here.
The "lesser of evils" choice tells us that given the choice, we will prefer to go into the wood chipper feet first, for as long as we still have our head there is hope, no?
No wonder W-Mart is hurting. Everybody's at Nordstroms!
Cat, UPS, And Walmart are bellwethers for me.....and none of them are doing well...Walmart will see higher expenses as government regulations kick in....just think utilities going up because of the caol war....and wages because of the minimum wage....their sales will go up as people get poorer...but the margin will shrink...and watch for closures in high theft areas....shoplifters will be the most foot traffic in many areas.....I like Walmart..its feeding the masses and the lower class.....and its sad to watch it fall..but that is the new America
We passed the Walmart exit in Poortown. Now, when people get poorer sales at the Dollar Store go up and sales at Walmart go down.
Higher electric bills will be really good for everyone. I don't mind paying 400% more so I can breath that clean air 100 years from now.
...wait a sec.....
https://www.youtube.com/watch?v=x2KRpRMSu4g
I just bought ED, SO, DUK and FE. That's the only way to get my electric bill "rebated".
Just built a new Dollar Store near my parents' place in Montana...place does great business. Says a lot, IMO...
There has been nearly zero semblance of a recovery here. The tone is very much skeptical of the establishment and status quo. Gives me some hope.
Tick tock, tick tock...
There is no doubt that the world economy is under great threat right now...and likely far into the future as long as we have the current crop of geniuses running things, but I think CAT's problems may be more of competition than just economic down trends.
And it is hard to imagine that Walmart is suffering in a time where poverty is as entrenched and growing as we see today. There must be other alternatives to Walmart that are having greater success. I live in an area with about 55% black population and see no end to nice new cars...expensive cars. Could it be that due to entitlements and other benefits that what we would consider "the poor" actually are doing pretty well, and given the amount of negative press the portrayed typical 'Walmart shopper" has received, have chosen to disassociate themselves from that demographic and moved up the consumer social ladder.
While I am not poor, I know I avoid going to Walmart for that exact reason. I would rather spend more and avoid that experience. Looking at the spending choices of the poor, I do not accept that "the poor" make their purchasing decisions on price alone, any more than the rest of us.
Good business, hard work, low return on investment.
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Gonna be a sour Christmas this year, of course the Main Stream shills will claim " It was the best shopping season ever " that and pull out old fake video footage from yeas ago showing people waiting in lines or trampling over each other for cheap Chinese goods....its all staged, just look at the videos closely, its the clothing that people are wearing that is the dead give away lol...
Christmas? I'm still getting ready for Thanksgiving; catching all the pigeons I can, cleaning them and throwing them in the freezer. My guests will be impressed when i serve them 'squab' rather then the common turkey.
illegals crammed into one home, one stove one tv sometimes sharing beds and furniture..not alot of stimulus as economists predict, add in shipping money back to the folks in s america, and use of .gov cheese, and you get net loss of economic benefits..the free trade open borders folk are in denile and mystified by the outcome of their glorius plans for the US/EU economy..Mr trump may just be right.
The future that awaits us all.
Old, they won't be cramming me into the home like cord wood.
(unless I drool a lot)
As I age, I have had to realize that my options are narrowing. I am losing physical and mental abilities, leaving only money as a tool of leverage. They are now working to minimize that as well. Ultimately I will do as I'm told...or go out in a blaze of furry.
nah, its nap time
i am sure these good liberal sissy boys would now repudiate their own song as being hate speech
https://www.youtube.com/watch?v=lRjItDLnAwc
Long wmt short amzn
Listening to CNBS this morning and they were going on about how plentiful the jobs are in this country and how low gas prices are a boon for the CONsumer and they couldn't figure out why Walmart keeps missing. I just wanted to scream "because it's all bullshit! People don't have any fucking money!"
Admittedly I do see more Help wanted signs, but they're all garbage shit jobs that have a high turn over rate due to it takes no brains to do, perfect for the Millennial types.
The low gas pimping it pure bullshit, gas should be $1.50 a gallon or less right now.
The Gas is free, you're just paying tax.
I always enjoy a great scientific explanation of economic fundamentals! Up arrow for the Doctor.
A very nice checkout clerk told me that a customer in front of us tried to pass off a counterfeit $100.00 bill. When she asked her to wait a minute, she ran for the exit. She didn’t think unusual enough to call police or management. I never have a $100.00 bill.
Wal-Mart has become the go to place for society misfits. My car was dinged in handicap parking. They don’t stock enough of popular items hoping you will substitute higher profit items. Clogging shelves. We go more often to Meijers. Wal-mart is following strategy of Farmer Jacks and other bankrupt retailers. I see fewer customers every time we shop.
I'm happy they lowered the price of Marie Calendars TV dinners from 2.50 to 2.00. A week of lunches for 10 bucks. YAY!
EBT no limit in 3....2......1
I thought they sub-leased numerous stores to .gov (FEMA, JADE HELM, DHS??) at a very high price. What happened?
Maybe Walmart should have left those 5 stores open as they were. The barbed wire on them now, looks somewhat intimidating to customers.
The Walmart symbol, the Jade Helm symbol and the Star if David are all representations for the same thing. If one connects the tips of the Walmart symbol and Jade Hem symbol (as opposing triangles), one gets the Star of David.
My son works as a firearms inspector at a major sporting goods/outfitter store which shall remain nameless here, but it is one of those that has a huge aquarium full of sport fish and taxidermy lining the walls.
He tells me that the higher-ups are worried because through the summer they have been running a $10,000 per day deficit. It takes a pile of money to keep an 80,000 square foot retail space operating in good order. They are hoping that the usual surge in sales preceding and during the fall hunting season will bring them back into black numbers. That surge could turn into a tsunami of demand for firearms and prep items if the predictions of the 2015.75 crowd come true. Despite the recent wisdom of K Kardash tweets, you cannot purchase firearms online without going through a FFL dealer.
I love going in there and browsing through the gun library. My Canadian friends were taken aback and seemed almost in reverential awe when I took them on a visit. Only in America, for now.
Love the Gun Library. Looking for pepperboxes though, sometimes see them.
Allen and Thurber? Vintage pepperboxes in decent condition don't come cheap!
Town (city to us) near me of 50,000 opened one of these stores. I can see that working but one of the competitors is moving in as well. Can't imagine there being enough business. Lots of hunters here but the population all over is low.
Difficult to compete with Amazon's ZERO profit scheme.
wally needs free shipping
Sucks not being a club stock like Amazon, Apple, Netflix, Facebook or Chipotle.
Its like you're a psychic.
Everyone STF up and buy Tesla, Uber, Netflix, FB, Alphabet, Amazon and Apple. These are the companies of the future. I can see it all now. We'll all be sitting in self driving cars (Tesla, Alphabet and Apple) watching Netflix will ordering our groceries online that will be delivered to us by Amazon drones. For those poor souls who can't afford a self driving car, they can share rides in the Uber/Tesla, Alphabet, Apple vehicle, while listening to their watch or viewing the Google Glasses all the time liking each other on FB.
What a glorious world it will be.
Truly a utopia.
finally they will be able to track you to the micro second. they will know how many times you wipe your ass, if you do.
Circle jerk in a pool of smegma
This is absolutely based on demand. Zombies love going there and then complaining about how shitty it is, as seen on this thread.
Local Walmart used to be open 24 hours. Saw a sign last week saying they are closing between 1 AM and 6 AM starting August 16th. Now I know why. Parking lot is never very crowded except the first few days of the month, when the gubmint money comes in.
well the yuan just devalued so next quarter should be great. lol
Only in America for now is right! I have family in Canada and the gun laws are restrictive. I live in Illinois and we need a state police issued FOID card to even own a gun or buy ammo. So guess what . If you are a legal gun owner they already know where you live. I had a South African PH friend visiting town as he traveled the winter outdoor show circuit ! We went to a gun store where he wanted to purchase a .375 rifle. He had cash. They would not let him touch a gun with out a FOID card. Welcome to Amerika. Just like u said . For now......
How's that decision to trim back your selling of guns and ammo working out for you, eh Walmart? Get some .22LR on your shelves if you want sales to increase!
Profits tumble for Wally Word ?!?
What they need is somebody cheaper than China to make goods.
Japan LOL, Singapore, Taiwan, Bangkok too expensive, USA to greedy.
Maybe some of those countries the US has screwed over in the past, like Nigeria, Botswana
Can we have those raises back so they can flow to the bottom line aka profits?
We should not let Wal-mart's lack of execution hide us from the greater truth: this US economy is in deeper trouble than 95% of the public even grasps.
Sears isn't much better. Went there on Sunday for a Friends and Family thing that do where you get 10-15% off. On top of that Maryland was having some kind of tax-free period and Sunday was apparently the last day (so I was told), so the incentive was there to shop. Anyway, we pulled into the lot for the 6-9pm event at around 7:30 and the lot was bare. We were the only car on one side of Sears. We went in, and for the hour and a half that we were there until the store closed, we only saw one other customer in Sears, and she looked like she may have been one of those mall walkers getting exercise. No way will that chain last.
Silver lining...For whatever reason, seems people are buying less slave labor manufactured, imported junk. So, maybe, just maybe, they're tending toward US made goods (and, hope of hopes, not faux US brands).
The river of US wealth flowing out of the US has temporarily slowed.
Convert them into local landfills and throw the Chinese junk they sold in.
No. They are tending towards making stuff last longer (if possible) or not getting new unnecessary junk that they don't need (and can no longer afford).
No offense to anyone who shops there, but the 'Walmart experience' reminds me of a scene from Dawn of the Dead, wherein a growling zombie is shown aimlessly pushing around a shopping cart...
Obviously Walmart's customers either do not have the funds and / or they have chosen to buy only what they need.
Or have gone somwhee else to buy. WalMart is not alwyas the cheapest nor do they have the broadest range of goods.
But Wal-Mart has an other Scapegoat in Pay Raises and Dollar
http://www.bloomberg.com/news/articles/2015-08-18/wal-mart-s-results-trail-estimates-as-currency-weighs-on-profit