The question here is, how much of Wal-Mart's first-quarter results should be blamed on recent macro events such as the 2% increase in the Social Security payroll tax rolled out at the beginning of the year? Not to mention there was the delay in income tax refunds; the company warned back in January that its earnings results may be adversely affected.
These two events point to one thing: consumer spending, which always matters to Wal-Mart. While the 2% decline in store traffic is discouraging, investors realize that "this is Wal-Mart." What I mean is, we've been here before and the company has overcome much worse. The fact is people aren't going to suddenly stop shopping for food and household goods. Not many stores can compete with Wal-Mart on pricing and convenience.
For that matter, management said Wal-Mart was able to gain market share in categories like food, consumable and health and wellness products. This is the second consecutive quarter in which Wal-Mart has done so.
Management also expects modest improvements going forward as earnings-per-share guidance for the second-quarter expected to come in the range of $1.22 to $1.27, which represents year-over-year growth of 3% to 7%.