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Rose Zhou/MEDILL

Wal-Mart will open 270 to 300 neighborhood stores like this one in downtown Chicago during the coming year.

Cold weather freezes Wal-Mart's 4th quarter earnings; outlook flat

by Rose Zhou
Feb 20, 2014

Too much

Rose Zhou/MEDILL

Wal-Mart's fourth-quarter earnings decreased 21 percent to $4.43 billion.

Retail giant Wal-Mart Stores Inc. reported seriously decreased fourth-quarter earnings Thursday and blamed the poor showing on severe winter weather.

Wal-Mart earned $4.43 billion, or $1.36 per diluted share in the quarter ended Jan. 31, down 21 percent from $5.61 billion, or $1.67 per diluted share, in the year-ago period. The result missed Wall Street’s consensus estimate of $1.59 per share compiled by Bloomberg LP.

Store closures and restructuring in China and Brazil were a drag on the company’s bottom line last quarter. Excluding such one-time items, Wal-Mart earned $1.60 per share – a penny above the $1.59 estimate of analysts, but down slightly from an adjusted $1.67 per diluted share in the year-ago quarter.

Revenues in the fourth-quarter rose 1.5 percent to $129.71 billion from $127.78 billion the previous year. Same-store sales – those open for at least a year – declined 0.4 percent.

“We were encouraged by our comp performance in the first half of the fourth quarter, including the holiday period,” said Doug McMillon, Wal-Mart’s new president and CEO. “But like many other retailers, weather got the best of us throughout the back half, resulting in a fourth-quarter period comp decrease of 0.4 percent.”

Wal-Mart projected that its adjusted earnings in the current quarter will fall between $1.10 and $1.20 per share. That compares with $1.14 in the same period last year.

“In the first quarter, we expect the retail landscape to remain challenging,” said Bill Simon, president of Walmart U.S. “Comp sales were down at the beginning of the 13-week period, due largely to continued winter storms.”

In 2013, Wal-Mart accelerated the growth of small format stores by adding 105 Neighborhood Markets in U.S. urban areas. The retail giant will open between 270 and 300 neighborhood stores this fiscal year.

Credit Suisse analyst Michael Exstein said he remains positive about the company.

“Today's results do not in any way change our intermediate and longer-term positive view on this retailer,” Exstein said in a research note. “While [Wal-Mart] faces macroeconomic challenges, we believe it has the opportunity to gain share as other retailers may find their positions in the marketplace compromised.”

Exstein said he also is encouraged by Walmart’s focus on “rationalizing” its international activities and the rollout of smaller stores.

For fiscal 2014, Wal-Mart earned $16.02 billion, or $4.88 per diluted share, a 5.7 percent decrease from $17 billion, or $5.02 per share, in fiscal 2013. The company’s revenue totaled $476.29 billion, a 1.6 percent increase from $468.65 billion.

Wal-Mart shares closed Thursday at $73.52, down $1.33 or 1.78 percent.