Fly Intel: What to watch in Walmart earnings report

Walmart (WMT) is scheduled to report results of its first quarter before the market open on Thursday, May 16, with a conference call scheduled for 8:00 am EDT. What to watch for: 1. OUTLOOK: In February, Walmart reiterated its fiscal 2020 guidance, including sales growth of 3% or greater. Walmart U.S. comp sales growth is expected to be 2.5%-3% and eCommerce net sales growth is expected to be around 35% for FY20, the company said. Earnings per share are expected to be down by a low single digit percentage vs. fiscal 2019. The current Street forecast for EPS and revenue are $4.76 and $528.3B, respectively. The company previously said it was moving to an annual guidance framework with its quarterly updates, and that while there may be fluctuations within the quarters, "we believe EPS growth will be relatively consistent across the year." 2. TARIFFS: Many large U.S. firms prepared for the U.S. to implement increased tariffs on $200B of Chinese imports, with some noting their annual forecasts anticipate the trade friction, The Wall Street Journal reported. While some said they would raised prices, Walmart is among the companies that said they chose to bring in extra inventory. Amid the U.S./China trade battle, Cowen's Oliver Chen said Walmart is among the best positioned as it has lower China sourcing risk and greater scale. 3. COMPETITION: Retailers like Walmart have been hurt by an increase in online shopping on sites like Amazon rather than at brick-and-mortar stores. Walmart announced this week that it is stepping up its battle with Amazon by offering one-day delivery without a shipping fee, weeks after Amazon announced a similar offer. On April 25, Amazon said it plans to deliver packages to Prime members of in one day and expects to spend $800M toward the shipping goal in the second quarter alone. Walmart said that as many as 220,000 items, which range from laundry detergent to toys and electronics, will qualify for one-day shipping. Walmart started offering same-day pickup in its stores in 2011 and caught up with Amazon's two-day free shipping two years ago by offering it without a membership fee. 4. POTENTIAL PUSH INTO CBD, ASDA IPO: Executives at Walmart, Target (TGT), Kroger (KR) and Safeway have quietly been meeting with makers of beverages, gummy bears and topical creams and oils that are infused with cannabidiol, an ingredient in marijuana said to relieve pain and stress symptoms, the New York Post reported. The chains are requesting product samples, along with lab results and pricing information. Additionally, Walmart confirmed it's considering an IPO for its Asda unit after U.K. antitrust regulators blocked a planned merger with rival Sainsbury (JSAIY). The company said any preparations for going public would "take years."

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