In yet another quarter confirming that Walmart is merely a company that can beat analyst expectations when it cashes Uncle Sam's welfare checks and foodstamps, when the impact of Obamacare is ignored, and when the second it snows all bets are off, WalMart reported Q1 EPS of $1.10, below the $1.15 expected, even if the company was able to explicitly quantify what the impact of snow in the winter was: "Severe weather in the U.S. businesses negatively impacted EPS by approximately $0.03." Apparently the weather's impact on the top line was over $1 billion because revenues came in at $114.96 billion, below the $116.3 billion expected.
In fact the weather in the quarter ended April 30 (when as far as we can recall there was only snow in February because retail sales in March soared on the snow thawing) was so bad, the company dedicated an entire section to it:
"Walmart's first quarter net sales increased 0.8 percent over last year. Like other retailers in the United States, the unseasonably cold and disruptive weather negatively impacted U.S. sales and drove operating expenses higher than expected," said Doug McMillon, Wal-Mart Stores, Inc. president and chief executive officer.
Comp stores of -0.2% missing expectations of 0.0% were also due to, you guessed it, ther weather:
"Our comp of negative 8 basis points for the period was in line with our relatively flat guidance," said Bill Simon, Walmart U.S. president and CEO. "A number of severe winter storms negatively impacted us during the quarter. A solid start to spring and a strong Easter drove positive comps in the back half of the quarter.
And then there were taxes:
Additionally, the company's effective tax rate for the quarter was higher than anticipated. The company still expects the full-year tax rate to range between 32 and 34 percent.
How long until WMT buys a Dutch company and reincorporates there to save on taxes?
Ok fine, weather (and taxes) were to blame for everything in the past. So what about the future? Well, WMT forecast a Q2 EPS range of $1.15-$1.25, below the $1.29 consensus, for the following reasons:
"We expect second quarter fiscal year 2015 diluted earnings per share from continuing operations to be between $1.15 and $1.25. This compares to $1.24 last year," said Charles Holley, executive vice president and chief financial officer. "Our guidance assumes incremental investments in e-commerce, headwinds from higher health care costs in the U.S. and increased investments in Sam's Club membership programs. We continue to expect our full-year effective tax rate to range between 32 and 34 percent. We expect our effective tax rate to be at the high end of this guidance for the second quarter."
So to summarize: weather, Obamacare and taxes. And of course, we expect that the lack of foodstamps will also be discussed on the earnings call.
Of course, the only reason why the company's EPS disappointed is that while WMT CapEx tumbled from $3.0 billion a year ago to just $2.2 billion this quarter, so did buybacks, as the company repurchased a measly $626 million of stock down from $2.2 billion a year ago. Judging by the stock reaction in the premarket, shareholders are anything but happy with this outcome.