Wal-Mart misses 2Q profit forecasts

“A name like Wal-Mart today is part of what keeps the market kind of range bound, there are just too many companies with global businesses that are not really firing on all cylinders and then you throw in moves in China”.

Still, even with encouraging numbers in the areas that Wal-Mart targeted for growth, McMillon still acknowledged that the company has some work to do in managing expenses in the last half of the year. U.S. crude futures rebounded to trade up 0.4 percent to $42.05, after hitting an intraday low of $41.43, close to their lowest since early 2009. Walmart had forecast $1.06 to $1.18 a share in earnings.

Dick’s Sporting Goods, which sells fitness and sports gear, rose 3.8 percent after raising its annual earnings forecast by a penny to $3.13-$3.21 per share from $3.12-$3.20. Other income primarily benefited from the sale of bank operations in Mexico. Japan’s Nikkei 225 slipped 0.5 percent to 20,458.50 and South Korea’s Kospi fell 1.6 percent to 1,925.17.

Airline stocks have come under considerable selling pressure over the course of the trading day, dragging the NYSE Arca Airline Index down by 1.7%.

Wal-Mart Stores, Inc. (NYSE:WMT) witnessed a decline in the market cap on Monday as its shares dropped 0.65% or 0.47 points. Lower margins at Wal-Mart U.S. were due to headwinds from pharmacy reimbursements and ongoing shrink.

“Inventory shrinkage was meaningfully higher than planned for the quarter”, Foran said in an earnings call.

Along with the Fed minutes, trading on Wednesday could also be impacted by reaction to the release of a report on consumer price inflation.

Meanwhile, sales at Wal-Mart’s UK supermarket chain, Asda, were down 4.7% in the second quarter, while profits were flat as it struggled to compete with discount retailers. Shares of Wal-Mart Stores have fallen about 16% in the past 12 months.

Wal-Mart worldwide: Segment net sales, including fuel sales, declined 9.6% year over year to $30.6 billion. The business’s revenue was up.0% on a year-over-year basis. Excluding fuel impact, sales increased 2.8%. In the past week, the shares have outperformed the S&P 500 by 0.91% and the outperformance increases to 0.28% for the last 4 weeks.

Wal-Mart’s quarterly revenues stood at $120.23 billion. That beat the 1 percent projected by analysts, according to Consensus Metrix. Compare that with revenue growth, which barely grew in the period. These initiatives are expected to pull down fiscal 2016 earnings by 24 cents per share. Yarbrough and other analysts like Ben Bienvenu at Stephens Inc. support the investments in e-commerce for the company’s long-term viability, but also note there is short-term trade-off in bottom line profits.

Though the company’s plans to provide a pay hike and invest more in e-commerce initiatives would help to regain investors’ confidence in the company, it will reduce earnings in the near term.

CURRENCIES: The U.S. dollar weakened to 124.300 yen from 124.391 yen while the euro strengthened to $1.104 from $1.103. Morningstar Premium Members gain exclusive access to our full Wal-Mart Report, including fair value estimates, consider buying/selling prices, bull and bear breakdowns, and risk analyses.