NEW YORK (TheStreet) -- Could Walmart (WMT) disappoint when it reports second-quarter earnings on Aug. 14? U.S. division president and CEO, Bill Simon, told Reuters in a recent interview that the giant retailer hasn't been a beneficiary of the upturn in the U.S. labor market.
"It's really hard to see in our business today .. that it's gotten any better," Simon said, when asked about the improving labor market. "We've reached a point where it's not getting any better, but it's not getting any worse, at least for the middle class and down."
The company said in May that it expects U.S. second-quarter same-store sales to be "relatively flat" with a year earlier, when it reported a 0.3% decline. Walmart said in May that earnings would come in at between $1.15 to $1.25 a share vs. $1.24 a year earlier.
Walmart's vice president of investor relations, Carol Schumacher, said: "You can take the comments at face value, as Bill was talking about the employment picture for our customer, not specifically about second-quarter sales for Walmart U.S. The guidance that we provided on Thursday, May 15, for Walmart U.S. comps for the second quarter was 'relatively flat.' We have not updated that guidance."
My firm, Belus Capital Advisors, which rates Walmart shares a sell with a $71 price target, views Walmart's forward earnings outlook as weak because of the company's ongoing investments in lower merchandise pricing and competitive pressures from online channels, notably Amazon (AMZN) and Best Buy (BBY).