Walmart has slashed its 2019 earnings forecast citing the impact of its acquisition of Flipkart, an Indian e-commerce company. Walmart purchased a 77 percent stake in Flipkart for $16 billion this past May. The acquisition was the biggest on record for Walmart in its history.
The retailer has warned that e-commerce growth won’t be as strong in the next fiscal year and is expecting e-commerce sales in the U.S. to see a growth of 35%. This is down from 40% this year.
For fiscal 2019, Walmart is now expecting adjusted earnings per share in the range of $4.65 to $4.80. Previously the expected range was $4.90 to $5.05. Refinitiv had been expecting adjusted earnings per share of $4.79.
For fiscal year 2020, Walmart said it anticipates its U.S. same-store sales growth to be in the range of 2.5 to 3 percent. Fiscal year 2020 operating income is expected to decline slightly. Walmart said it expects to see increases in 2019, excluding the Flipkart deal.
CFO Brett Biggs told CNBC’s Courtney Reagan that he “feels good about the things we can control.” Walmart has been “innovating more, and more quickly, than in the past year or two.”
Biggs said during the company’s annual investor meeting,”We will minimize the impacts on our customers as much as possible while balancing the interests of investors. … We will actively manage prices and margins through this period.”
“We’re adapting and transforming with speed to better serve our existing customers and reach new ones,” CEO Doug McMillon stated.
He added, “We’re operating with discipline, balancing our short and long-term opportunities. While we’re excited about what we’ve done so far, we aren’t satisfied. As we execute today and build for tomorrow, our associates and unique omni-channel assets position us for success.”
In regard to tariffs by the Trump administration forcing price hikes, Biggs remarked that Walmart is “giving as much guidance as we think is practical,” for now.
Walmart recently announced a partnership with Advance Auto Parts to sell its products and also announced a partnership with movie studio Metro Goldwyn Mayer to create content with Vudu, its video-on-demand service. The retailer also acquired lingerie company Bare Necessities and Eloquii, a plus-sized clothes retailer.
“While the top line outlook for 2019 looks healthy and was generally in-line with expectations, the margin view for next year did come in softer than expected,” Gordon Haskett analyst Chuck Grom remarked.
This year Walmart has seen its shares fall roughly 5%.