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Wal-Mart Warns On Profits, Blames Winter Storms

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Wal-Mart Warns On Profits, Blames Winter Storms

Wal-Mart (NYSE: WMT) issued a profit warning on Friday morning. The company sees its fourth quarter EPS at or below its previous guidance of $1.60 to $1.70. For the full year, the company expects its EPS to be at or slightly below the low end of its guidance of $5.11 to $5.21.

“Despite a holiday season that delivered positive comps, two factors contributed to lower comp sales performance for the 14-week period for Walmart U.S,” said Charles Holley, Wal-Mart's Chief Financial Officer in a press release. “First, the sales impact from the reduction in SNAP (the U.S. government Supplemental Nutrition Assistance Program) benefits that went into effect Nov. 1 is greater than we expected. And, second, eight named winter storms resulted in store closures that impacted traffic throughout the quarter.”

Brian Sozzi, CEO and Chief Equities Strategist at Belus Capital Advisors, thinks that Wal-Mart could announce store closures for two reasons.

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In a note to clients, Sozzi wrote that Wal-Mart is operating in “an entire industry of large retail boxes battling each other in real time to present the lowest possible price to more informed consumers” and that “Wal-Mart itself is not operating at a high level, ranging from frequent out of stocks in key traffic driving departments (think produce and basics) to too high inventory levels in seasonal.”

Shares of Wal-Mart were trading lower by around one percent following the company's announcement in the pre-market session.

 

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