Scary WMT Visual

Takeaway: The comp miss is obvious. But the EPS miss is startling given historical context.

***Originally published today at 8:38am EDT, the following note is sourced directly from the Hedgeye Retail Team, led by Managing Director Brian McGough. If you're coming around to our Macro Team's view that #InflationAccelerating slows consumption growth, ping sales@hedgeye.com to speak with Brian regarding his team's Best Ideas on the short side of the US consumer.***


 

Chart 1 shows what everybody already knows, that WMT comps disappointed. The company cited weather for 20bps of the decline. If there's any retailer who's data we trust, it's Wal-Mart's. But the 2-year trend, which we place much heavier weight on as it relates to drilling down the real underlying trend, is nothing to write home about. This plays right into Hedgeye's #growthslowing theme as it relates to the US Consumer.

 

Scary WMT Visual - 1

 

The more telling visual is the EPS miss. In 11 years, WMT has only missed 12 times, and nine of those were by a penny. Today it missed by a nickel. That's only happened once before -- in 2007. The blue bars in this chart show the absolute EPS variance to consensus for each quarter. The dots refer to the right axis showing the percent beat or miss in each period.   Not a good way to start things off in the first quarter for new CEO Doug McMillon.

 

Scary WMT Visual - 2

 

Brian McGough

Managing Director

 

Alec Richards

Analyst

 

Jeremy McLean

Analyst

 



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