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Wal-Mart's Q1 outlook falls short, but raises annual dividend by 18%

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Wal-Mart Stores (NYSE:WMT) reported today better-than-expected fourth quarter profit, but its outlook for the current quarter fell short of Street estimates, citing higher payroll taxes, ongoing unemployment and higher gas prices. 

For the first quarter, it said it expects earnings per share in the range of $1.11 to $1.16, below the consensus forecast of $1.18, with the company saying the estimate considers "current economic factors" that are affecting customers in many of its markets.

For the year, it forecast earnings of $5.20 to $5.40 a share, compared to Street forecasts of $5.38 a share for the year.

But shares of the big box retailer still rose more than 1.8% in early deals to $70.48 as the company raised its annual dividend by 18% to $1.88 a share. 

For the fourth quarter that ended January 31, income from continuing operations was $5.6 billion, up 7.9%, while earnings on a per share basis were $1.67 per share, versus $1.51 a year earlier, topping the Wall Street view of $1.57 a share. 

Net sales for the quarter were $127.1 billion, up 3.9% from $122.3 billion a year ago. On a constant currency basis, sales would have increased 3.7%, the company said. 

Analysts polled by FactSet expected sales of $127.83 billion.

Membership and other income fell 7.8% to $815 million. 

At Walmart U.S., the company’s biggest division, fourth-quarter sales rose 2.6% to $74.7 billion. 

Comparable store sales rose 1%, missing analysts’ average estimate of a 1.5% gain. The company said traffic declined by 10 basis points, with gains driven by an increase in average ticket of 1.1%. 

The company said February sales started slower than planned, due in large part to the delay in income tax refunds. Due to the slower slaes rate in the first few weeks of the first quarter, the retailer is predicting comparable sales to be around flat for the current three month period. 

Wal-Mart added that it is now seeing a more normalized sales pattern as the refund check increased late last week. 

It also said it continues to monitor economic conditions that can impact its sales, such as rising fuel prices, changes in inflation and the payroll tax increase. 

The Sam's Club business saw sales rise 3.4% to $14.5 billion, with comparable sales, excluding fuel impact, increasing 2.3%, missing estimates for a 2.4% gain. The company said the unit benefitted from a 1.6% increase in traffic and a 0.7% rise in average ticket. 

"Overall, we are proud of the accomplishments this year at Sam's Club, but also recognize the mounting economic concern from both small businesses and consumers," said president and CEO of the unit, Rosalind Brewer. 

"Recent traffic patterns of our business members indicate that they are more deliberate in their spending due to macro-economic factors. Additionally, like Walmart U.S., our Advantage members are pressured by higher payroll income taxes, ongoing unemployment and higher gas prices."

Quick facts: Walmart Inc

Price: 132.01 USD

NYSE:WMT
Market: NYSE
Market Cap: $373.85 billion
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