Wal-Mart's E-commerce Health is Due a Checkup--Earnings Preview

By Sarah Nassauer Features Dow Jones Newswires

Wal-Mart Stores Inc. is scheduled to report fiscal first-quarter results before the market opens Thursday. Here is what you need to know:

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EARNINGS FORECAST: Analysts forecast earnings per share of $0.96, according to Thomson Reuters, down from $0.98 a year ago.

REVENUE FORECAST: Analysts forecast $117.7 billion in revenue, up from $115.9 billion a year ago.

WHAT TO WATCH:

-- RETAIL SALES & TRAFFIC: Analysts are expecting Wal-Mart's sales at stores open at least a year to increase for the 11th consecutive quarter, in contrast with the downward trend at many other big-name retailers, including Macy's, Kohl's and J.C. Penney. Wal-Mart has estimated that sales in its existing U.S. stores will rise 1% to 1.5%. Its traffic has risen for nine quarters, thanks in part to improvements it has made at its stores. Food deflation, which has weighed on sales at the country's largest grocer, may have also moderated this quarter, which will boost sales, say analysts.

-- E-COMMERCE REALITY: It isn't clear, however, how Wal-Mart will fare long-term against online rival Amazon.com Inc. On Thursday we could get a moment of truth on Wal-Mart's e-commerce health. Last quarter, for the first time it reported U.S. e-commerce sales separately from global online sales, showing a 29% uptick in U.S. sales, which included a boost from its Jet.com purchase last year. This time around, if growth appears to stall, that could be a sign that Wal-Mart isn't making inroads on Amazon despite months of effort, including e-commerce acquisitions and new online tactics around pricing, shipping and selection.

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-- PROFIT PRESSURE: Like other retailers tethered to stores, Wal-Mart is facing diminishing profits as it pours money into e-commerce operations like building warehouses, expanding online inventory and offering faster shipping. The investments have eaten into Wal-Mart's margins, and the company last quarter said they would again come in flat this year at $4.20 to $4.40, compared with $4.32 last year.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

(END) Dow Jones Newswires

May 17, 2017 07:14 ET (11:14 GMT)