Stock Price Rising After Walmart Earnings Disappoint
You may want to keep a close watch on Walmart (NYSE: WMT) stock price right now. Why? The company announced its 2019 fourth quarter earnings report this week. Let’s just say the holidays weren’t as joyful for the retail giant.
Walmart didn’t meet expectations as sales fell short of analysts’ estimates. In addition, employees are expecting job cuts in the coming weeks.
Keep Watch on Walmart Stock
Walmart’s earnings report is a cause for concern in many investors’ minds. However, the company was quick to address the report and its findings.
“Sales leading up to Christmas in our U.S. stores were a little softer than expected,” CEO Doug McMillon noted in the report.
Total revenue for the fourth quarter was $141.67 billion. While that is an increase of 2.1%, it’s short of the expected $142.49 billion. That places earnings per share (EPS) at an adjusted $1.38. Another disappointment as EPS expectations were at $1.43.
Walmart put the blame in many areas. This includes poor gaming sales, tobacco sales and a warmer winter affecting apparel sales during the holidays. It also experienced troubles in key international markets and pressure with associate scheduling. Yet how will this affect Walmart’s stock going forward?
“We understand the factors that affected our results and are developing plans to address them,” CFO Brett Biggs stated. “We remain confident in our business strategy and our ability to deliver value and convenience for our customers through an integrated omnichannel offering across the globe.”
Further Developments at Walmart
Outside of the earnings disappointment, Walmart employees are reportedly expecting job cuts soon. This past spring, the company announced a new “Great Workplace” initiative. Its purpose was to help stores run more effectively and help employees “do meaningful work.”
However, a report by The Washington Post notes that employees believe the initiative is causing widespread confusion. Walmart is reportedly telling employees that it’s removing certain positions, which include hourly supervisors and assistant store managers.
According to the report, the company is replacing these positions with smaller roles. The pay will be similar, but the role will carry more responsibility. These new developments are leaving employees in fear of losing their jobs. It’s also giving investors more concern over the company’s stock.
The initiative is being implemented at more stores this year. These changes began at 125 stores in 2019. Next, it will expand into 688 small-format stores and nearly 400 Supercenters.
Looking Forward with Walmart
Walmart expects earnings for 2020 to fall within $5 to $5.15 a share. This is below the estimated $5.22 EPS.
Sales should rise by “at least 2.5%” in the U.S. market. The company also has plans to bulk up its Supercenters and online presence. This includes $11 billion in store remodels and improvements to its digital infrastructure.
With all this movement, the market is actually spiking in the right direction. Walmart’s stock price is up despite the disappointing earnings report. It opened at $118.47 after a previous close of $117.89.
Investing in Retail
If you are looking to invest in retail, there’s no bigger fish than Walmart. The corporation is the current standard in the market.
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Walmart’s fourth quarter is concerning, but its grip on retail is as strong as ever. Continue to keep a close watch on Walmart stock if you’d like to tap into this market.