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Can Walmart’s Revenue Pick Up in the Second Half of Fiscal 2017?

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Sep. 22 2016, Published 1:57 p.m. ET

Walmart’s performance so far

Walmart’s (WMT) initiatives to improve its top line helped the retail giant deliver sales growth in the first two quarters of fiscal 2017.[1. Fiscal 2017 will end on January 31, 2017.] In August 2016, Walmart beat analysts’ revenue and earnings estimates for fiscal 2Q17, which ended on July 31, 2016. However, its fiscal 2Q17 adjusted EPS (earnings per share) fell for the sixth consecutive quarter on a year-over-year basis.

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More on 2Q17 performance

In fiscal 2Q17, Walmart’s revenue, which is made up of net sales, memberships, and other income, rose 0.5% to $120.9 billion. Its overall revenue growth in fiscal 2Q17 was driven by higher sales of the company’s US segment, partially offset by a fall in sales of the company’s International segment and Sam’s Club.

Walmart US is Walmart’s largest segment. The segment’s sales rose 3.1% in 2Q17, driven by higher same-store sales and a rise in e-commerce sales. Sales of the company’s International segment fell 6.6% in 2Q17 due to adverse currency movements. The company continued to face headwinds in the UK market due to heightened competition and food deflation. Sales for its Sam’s Club segment fell 1.3% in 2Q17 due to a fall in fuel sales due to lower fuel prices.

Walmart’s peers Target (TGT), Kroger (KR), and Dollar General (DG) reported sales growth of -7.2%, 4%, and 5.8%, respectively, in the comparable second quarter.

Walmart’s adjusted EPS fell 0.9% in 2Q17 to $1.07 due to the impact of higher wages, currency headwinds, and growth investments.

Revenue expectations

Analysts currently expect Walmart’s revenue in fiscal 3Q17 and fiscal 4Q17 to rise about 1% and 1.8%, respectively. This rise will most likely be driven by the company’s US segment. Based on guidance issued in August 2016, Walmart expects same-store sales growth of 1.0%–1.5% for its Walmart US segment in fiscal 3Q17. The company expects same-store sales growth for Sam’s Club, excluding fuel, to be slightly positive in fiscal 3Q17.

Series overview

In this series, we’ll look at Walmart’s efforts to improve its sales, e-commerce, and margins. We’ll also take a look at the company’s total shareholder returns, analyst recommendations, and valuation.

Let’s start by looking at Walmart’s sales initiatives.

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