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Walmart Misses Q4 Earnings Forecast, Tops $150 Billion In Sales

Walmart posted a record $152 billion in fourth quarter sales, but U.K. tax charges trimmed its bottom line and planned investments are hitting shares in early Thursday trading.

Walmart Inc.  (WMT) - Get Walmart Inc. Report posted weaker-than-expected fourth-quarter earnings Thursday, thanks in part to a charge linked to taxes in the United Kingdom, but still managed record sales of more than $150 billion as U.S. shoppers continued to favor big-box retailers over smaller rivals.

A planned surge in investment costs, however, and a tepid fiscal-year outlook pushed shares lower in pre-market trading.  

The world's biggest retailer said adjusted earnings for the three months ended in January came in at $1.39 per share, rising just one penny from the same period last year and missing the consensus forecast of $1.50 per share. The company said a decision to repay property tax relief in the U.K., linked to its ASDA division, clipped earnings by 7 cents per share. 

Group revenues, the company said, were tabbed at $152.08 billion, up 7.3% from last year and topping analysts' estimates of $148.3 billion. U.S. same-store sales rose 8.6% from last year, the company said, well ahead of the Refinitiv forecast of 5.8%. e-Commerce sales, Walmart noted, rose 69% on the quarter and 79% for the 2020 year. 

However, Walmart said it sees 2022 financial year sales to rise by only low single digits, with operating income and earnings to be flat to up slightly. It also pledged to lift average employee wages to $15 per hour and boost total capital expenditures to $14 billion. 

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“We completed a strong year and a strong Q4 thanks to our amazing associates. They stepped up to serve our customers and members exceptionally well during a busy holiday period in the midst of a pandemic,” said CEO Doug McMillon. 

“This is a time to be even more aggressive because of the opportunity we see in front of us,” McMillon. “The strategy, team and capabilities are in place. We have momentum with customers, and our financial position is strong.” 

Walmart shares were marked 5.7% lower in early trading following the earnings release to indicate an opening bell price of $138.80 each, a move that would trim the stock's six-month gain to around 3%.

"Although the bottom-line delivery is disappointing, we believe the underlying health of the business remains intact and top-line guidance suggests continued momentum even with difficult compares," said Oppenheimer analyst Rupesh Parikh, who lowered his 12-month price target on the stock by $3 to $162 while keeping his 'outperform' in place following the results. 

Last month, Walmart lost one of its most important executives as founder Marc Lore, credited with reviving Walmart's e-commerce strategy and turning into the nation's second-largest online retailer behind Amazon, announced his retirement.

Lore's retirement marks the second major departure of an e-commerce executive for Walmart this year, following Jamie Iannone's move to the CEO role at online marketplace EBay Inc.  (EBAY) - Get eBay Inc. Report in August.