Remember when several months ago Wal-Mart leaked [3]just how weak the economy was and that sales had been a "total disaster" (a piece of truthiness that promptly led to the termination of the leak source)? Guess what: they were not lying. Moments ago WMT reported Q1 results [4], which at the easily fudged bottom line were just in line with expectations, ot $1.14 driven by $2.2 billion in stock repurchases (30 million shares). However, it was sales, as warned, that came in well weaker than expected, posting at $114.2 billion on expectations of $116.1 - just as the guy warned. It gets worse:
- Q2 EPS expected in the range $1.22-$1.27, on expectations of $1.29
- Q1 comps ex-fuel -1.2% vs Exp. 0.4%
- Comps in Canada and Japan declined
- Sam's Club implements first fee increase since 2006: raises membership fee to $45 nationwide
- During the 13-week period, the Walmart U.S. comp was negatively impacted by a delay in tax refund checks, challenging weather conditions, less grocery inflation than expected and the payroll tax increase. Comp traffic was down 1.8 percent, while average ticket increased 0.4 percent.
From the CFO, Charles Holley: "Although we believe our company will leverage expenses for the year, the second quarter will be challenging, given expense pressures in International and our corporate area. Expense leverage may not be delivered evenly across the quarters, but we believe that by executing our plans, we will continue to reduce expenses and improve productivity."
And with this bad news to close the retail reporting season, we now fully expect the S&P to explode higher out of the gates on zero volume, with Kevin Henry's blessing of course, to such manipulated highs that even Joe Sixpack can do nothing but laugh.