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Figures reported by Walmart as earnings for its 2019 fourth quarter have disappointed the market and falls short of analyst expectations. As a result, the price of Walmart (WMT) started falling.
Even though they should know better the market usually expects big companies to announce impressive figures in their earnings report. All companies including big ones have their challenges and sometimes, these challenges are strong enough to put a dent in their quarterly figures. This is exactly the case of American multinational retail corporation Walmart which released a disappointing earnings report for the fourth quarter of 2019.
As a result, the Walmart (WMT) stock price has started to move down. At the moment of writing, it is $118.31 (-1.14%). However, we should admit that it is still practically the highest price all over the history of WMT stock trading.
Weak Walmart Earnings Report
Walmart has published its earnings report for the 2019 holiday quarter. The figures reported fell short of the forecast analysts already set for the company.
For example, the company reported total revenue of $141.67 billion of the quarter. The figure signifies a 2.1% growth from $138.79 billion where it was a year ago. Regardless, analysts expected $142.55 billion. Furthermore, its adjusted earnings per share sit at $1.30, lower than analysts’ expectations of $1.43. Also, the growth of same-store sales in the U.S. was 1.9%, also lower than the 2.3% analysts expected.
Disappointing as it is, the quarter which ended on January 31 pulled in a total net income of $4.14 billion and $1.45 per share. This is better than figures from a year ago at 1.27% per share and a total net income of 3.69 billion.
What Caused the Disappointing Earnings for Walmart
According to Walmart, it’s holiday season was a letdown. The company said that demand in its stores all over the US was a lot lower than expected. Specifically, it said clothing, toys and gaming didn’t meet up to the company’s expectations.
Most of Walmart’s income comes from the actual physical stores and not online. This means that if there is a lower influx of customers at the physical stores the company’s figures would suffer significantly.
Explaining the problem Walmart CEO Doug McMillon said:
“We started and finished the quarter with momentum, while sales leading up to Christmas in our US stores were a little softer than expected…We believe the compressed holiday season, softer toy industry sales, a lack of newness in gaming, and some assortment challenges in apparel contributed to the decline.”
The company also cited Chile as one of the factors behind the disappointments. The political unrest and disruption in Chile reportedly cost Walmart $110 million.
Target had a similar problem for its holiday sales. The company said last month that toys performed quite underwhelmingly during its holiday period. The news crashed Target’s stock at the time by 7%. Toymakers Hasbro and Mattel also fell by 2.5% and 6% respectively.
Target is also giving Walmart a run for its money. The company which has same-day delivery for its groceries Ship has now expanded the feature so that other goods can enjoy the same thing.