Adjusted EPS exceeds Wall Street's forecast for both periods

BENTONVILLE, Ark. — Walmart reported decreased net earnings for its fiscal 2016 fourth quarter and full year, with adjusted earnings per share above Wall Street’s consensus forecast.

The retail giant said Thursday that for the fourth quarter ended Jan. 31., net income fell 7.9% to $4.57 billion, or $1.43 per diluted share, from $4.97 billion, or $1.53 per diluted share, a year earlier.

The company noted that the EPS result reflects a negative impact of 20 cents from the closing of 269 stores globally (including 154 in the United States), partially offset by a 14-cent positive impact from discrete tax items. Excluding the net EPS impact of 6 cents per share, adjusted EPS for the quarter was $1.49.

Analysts, on average, had projected adjusted EPS of $1.46, with estimates ranging from a low of $1.41 to a high of $1.51, according to Thomson Financial.

Consolidated fourth-quarter sales totaled $129.7 billion, down 1.4% from $131.6 billion in the 2015 quarter. On a constant-currency basis, however, sales edged up 2.2% in the quarter to $134.4 billion from $131.6 in the prior-year period.

Sales at Walmart U.S. were up 2.4% to $81.5 billion in the 2016 fourth quarter from $79.6 billion a year ago. Same-store sales grew 0.6%, compared with 1.5% in the 2015 quarter. The retailer noted that Walmart Neighborhood Markets saw same-store sales climb 7%. Meanwhile, revenue fell 2.2% to $14.5 billion at Sam’s Club in the 2016 fourth quarter, with comparable-store sales down 0.5% versus a 2% gain a year ago.

Overall in the United States, including Walmart U.S. and Sam’s Club, Walmart’s 2016 fourth-quarter comp-store sales were virtually flat, up 0.1%. Excluding fuel, overall same-store sales rose 0.4%.

Walmart’s international sales, on a constant-currency basis, rose 3.3% to $37.4 billion in the 2016 quarter, led by strength in Mexico and Canada. Excluding the impact of foreign exchange, the retailer’s international sales declined 9.7% to $32.7 billion.

“We had a solid fourth quarter to close out our fiscal year, with adjusted EPS of $1.49. We are seeing momentum in our Walmart U.S. business as we continue to lap positive comps, and our international business is healthy and growing.” president and chief executive officer Doug McMillon said in a statement. “We are pleased with fundamental trends that are allowing us to improve our stores, add critical capabilities and deepen our digital relationships with customers. Our initiatives are making it simpler and more convenient for customers to shop at Walmart.”

For the full 2016 fiscal year, Walmart’s consolidated net sales dipped 0.7% to $478.61 billion from $482.23 billion a year earlier. On a constant-currency basis, the retailer’s fiscal 2016 net sales rose 2.8% to $495.69 billion. Global e-commerce sales on a constant-currency basis rose 12% year over year to $13.7 billion.

In the U.S., overall same-store sales in fiscal 2016 were up 0.5%, reflecting a 1.2% gain at Walmart U.S. and a 3% decrease at Sam’s Club. Excluding fuel, full-year comp-store sales in the U.S. rose 1%, including increases of 1.2% at Walmart U.S. and 0.4% at Sam’s Club.

Consolidated net income for fiscal 2016 came in at $14.69 billion, or $4.57 per diluted share, down about 10% from $16.36 billion, or $4.99 per diluted share, a year earlier. Adjusted EPS for 2016 was $4.59.

The consensus Wall Street estimate was for adjusted EPS of $4.58, with projections running from a low of $4.50 to a high of $4.62, according to Thomson Financial.

“We’re pleased with the way we closed out the year with a healthy balance sheet, strong cash flow and solid returns to shareholders. The investments we are making in our associates, our stores and digital capabilities are better positioning Walmart now and for the future,” stated Brett Biggs, executive vice president and chief financial officer. “Even as we continue to invest, we will remain focused on managing expenses across the company. Fiscal year 2017 EPS guidance is broadly in line with the guidance that we provided at our 2015 analyst day.”

For the fiscal 2017 first quarter, Walmart projects EPS of 80 cents to 95 cents, with Walmart U.S. sales edging up 0.5%. The sales forecast is down from the previous estimate for growth of 3% to 4% on a constant-currency basis, reflecting the impact from the recently announced store closures and the continued strengthening of the U.S. dollar, the company said. Analysts, on average, forecast Walmart’s first-quarter adjusted EPS at 90 cents, with estimates ranging from 78 cents to $1.00, according to Thomson Financial.

Walmart expects full-year fiscal 2017 EPS of $4.00 to $4.30. The average analyst forecast is for EPS of $4.17, with projections running from $3.96 to $4.91.