Walmart, Kohl's: Similar Results, Similar Outlooks

Wal-Mart Stores Inc. (NYSE: WMT) reported second-quarter fiscal 2014 results before markets opened this morning. The retailing giant posted diluted earnings per share (EPS) of $1.24 on revenues of $116.2 billion. In the same period a year ago, Walmart reported EPS of $1.18 on revenues of $113.52 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.25 and $118.47 billion in revenue. Walmart said EPS took a negative impact of $0.01 on non-income tax-related matter in its international division.

Kohl's Corp. (NYSE: KSS) also reported earnings for its second quarter on Thursday morning. The retailer posted diluted EPS of $1.04, compared with EPS of $1.00 in the same period last year. Sales rose from $4.21 billion to $4.29 billion. The consensus estimates called for EPS of $1.05 on revenues of $4.29 billion.

At Walmart, U.S. same-store sales were flat with last year, excluding fuel sales, and up 0.1% including fuel. For the year to date, same-store sales are down 0.6% excluding fuel and flat including fuel sales.

Kohl's reported quarterly same-store sales rose 0.9% year-over-year.

Citing cautious customers, Walmart cut its full-year revenue growth forecast in half, from a previous estimate for an increase of 5% to 6% to a new range of 2% to 3%. The third-quarter EPS estimate also was shaved to a range of $1.11 to $1.16, below the current analysts' consensus of $1.17. For the full year, Walmart chopped EPS guidance from a prior range of $5.20 to $5.40 to a new range of $5.10 to $5.30.

Kohl's now estimates EPS for its third quarter in a range of $0.83 to $0.92, short of the current consensus estimate of $0.94. The company expects sales growth for the third quarter in the range of 1% to 3% and same-store sales growth from flat to up 2%. Kohl's also cut the top end its full-year earnings guidance from $4.45 to $4.35. The bottom of the range remains at $4.15.

Both Walmart and Kohl's are suffering from the same problems that Macy's Inc. (NYSE: M) identified yesterday. Customers are simply not spending money if they don't have to. This would seem to lead to the conclusion that Walmart, which sells a lot of groceries, should be doing better. But the company's U.S. president noted that expected higher prices for groceries did not materialize in the second quarter.

Walmart's shares are down about 1.8% in pr-market trading, at $74.86 in a 52-week range of $67.37 to $79.96. Thomson Reuters had a consensus analyst price target of around $82.60 before today's results were announced.

Shares of Kohl's are unchanged in premarket trading, at $50.84 in a 52-week range of $41.35 to $55.25. Thomson Reuters had a consensus analyst price target of around $52.45 before today's results were announced.

Filed under: Retail Tagged: KSS, M, WMT