Goldman Sachs Comment on Wal-Mart's (WMT) Q1 and Guidance

Wal-Mart (NYSE: WMT) stock was pressured early on Thursday following soft Q2 results.

Analyst Matthew J. Fassler of Goldman Sachs commented on the results, saying "We expect the market to respond cautiously to the subdued 2Q guidance, as it suggests tepid ongoing sales trends, and operating margin challenges. Our estimates and target are under review pending today’s conference calls, in light of the 1Q/2Q shortfall/guide."

Analysis

• "Top-line actually exceeded our forecast, with US SSS quite close to our forecast and guidance (-0.1% vs. our flat estimate), Sam’s tracking light, and international beating.
• Operating margin in domestic businesses fell well short of our forecasts, and EBIT declined 4% / 2% at WMT US / Sam’s, respectively. International EBIT matched our estimate.
• On a consolidated basis, gross margin tracked modestly short, expense dollars were quite close to our forecast, and EBIT dollars tracked within 1%.
• Inventory trends were tough, as inventory rose 5.0%, up from 2.4% in 4Q2013, and well in excess of sales growth. The firm attributed this in part to the timing of Easter in international markets, but conceded challenges," said Fassler.

Goldman Sachs has a Buy rating on Wal-Mart.

For an analyst ratings summary and ratings history on Wal-Mart click here. For more ratings news on Wal-Mart click here.

Shares of Wal-Mart closed at $78.74 yesterday.

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