More retailers are on the way with their Q2 reports, and this time I will take a closer look at Wal-Mart Stores Inc. The stock peaked at an all-time high early last year, but slid. Now, the stock is on the way up again. To the top.
Wal-Mart Stores are changing and that`s fast. They are on the way to change to an e-commerce business from the traditional retail business. The firm has invested a lot of money in improving back and front-ends of the e-commerce business.
A couple of weeks ago, Wal-Mart acquired online retailer jet.com, for $3 billion. The company can feel the pressure from its biggest competitor Amazon, and their acquisition of jet.com will strengthen their e-commerce business.
Wal-Mart also sold its Chinese e-commerce business, Yihaodian. Everything was sold to the Chinese online retailer JD.com. All this is done to stay more focused on the international e-commerce presence.
CEO Doug McMillon said: «E-commerce growth here is too slow. The U.S number is better than the global number, but neither is as high as wed like. We can see progress against several of the necessary capabilities we need to win in e-commerce, but were still working on a few others. We need them all to come together to see stronger growth.»
The company has increased its labor costs in addition to a stronger dollar, and that in turn has given them a negative YoY profit growth for the last 5 consecutive quarters. Stiff competition from Amazon has also turned Wal-Mart`s revenue negative in the last two quarters of fiscal 2016.
Store sales have come in positive for the last 7 quarters, despite the downturn on the top and bottom-line. The world`s largest retailer with its market cap of $225,42 billion, is guiding for US same store sales growth in the range of 1% – 3%, and Wal-Mart come out with a report on Thursday.
The Estimize consensus is looking for earnings per share of $1,04 on $120,39 billion in revenue. Compared to a year earlier this reflects a 4% decrease in earnings and flat sales.
Earnings estimates have increased 3% since the last quarterly report, with sales estimates unchanged.
Wal-Mart Stores Inc will report on 18th August, before the markets open.
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