Walmart revives growth as fourth-quarter earnings rise

Walmart Inc has reversed a decline in fourth-quarter earnings on the back of price investments and planned cost cuts.

The company, which sells apparel, toys, housewares and groceries under the Sam’s Club, Walmart and Walmart U.S. banners, said it expects adjusted earnings of $3.14-$3.29 per share for the fiscal year ending January, 2019. That is below the average analyst estimate of $3.33, according to Thomson Reuters I/B/E/S.

Shares rose 3% in extended trading on Wednesday.

The company, whose sales and earnings have been under pressure in recent years from e-commerce and mounting expenses, said it would keep investing in price to attract consumers as sales growth trends remain tepid.

Walmart has said it planned to invest nearly $2bn to improve its supply chain, revamp stores and increase online shopping in coming years, while seeking to turn around its business.

According to Goldman Sachs’ estimates, investments in inventory have helped Walmart enjoy a reduction in short-term incentives, also known as promotions, of about $300-500m in 2017, a key driver of the company’s gross margin expansion.

Walmart’s adjusted earnings rose to $1.59 per share in the quarter ended 31 January from $1.48 per share in the year-ago period. Revenue was little changed at $128.4bn, but was still slightly higher than analyst expectations.

Analysts had expected a 2.2% fall in sales, according to Thomson Reuters I/B/E/S.

Shares of the world’s largest retailer rose 3% to $102.18 after the bell on Wednesday.

Reporting by Shari Weiss; Editing by David Goodman

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