Here We Go: Wal-Mart Cuts Guidance, Blames Foodstamps, Weather

Submitted by Tyler Durden on 01/31/2014 // http://www.zerohedge.com/news/2014-01-31/here-we-go-wal-mart-cuts-guidance-blames-cut-foodstamps-weather

• Brazil
• China
• India

 

That didn't take long. Moments ago the world's largest retailer (sorry AMZN) WoeMart (sic) just confirmed what everyone who is not an economist knows - the US consumer is barely alive. The reasons: cut in foodstamps, and of course, the weather: "“Despite a holiday season that delivered positive comps, two factors contributed to lower comp sales performance for the 14-week period for Walmart U.S. First, the sales impact from the reduction in SNAP (the U.S. government Supplemental Nutrition Assistance Program) benefits that went into effect Nov. 1 is greater than we expected. And, second, eight named winter storms resulted in store closures that impacted traffic throughout the quarter."
And all this just half an hour before we learn just how little savings US consumers have left with which to provide the same kind of one-time boost we saw in early Q4 before it all went to hell.
From the release:

The company provided fourth quarter diluted earnings per share from continuing operations (EPS) guidance of $1.50 to $1.60, which included a $0.10 per share impact from two discrete items, which resulted in an underlying1 EPS guidance range of $1.60 to $1.70. For the full year, the company expected to deliver EPS of $5.01 to $5.11 and accounting for the $0.10 of discrete items, the range for underlying EPS was between $5.11 and $5.21.

“We now anticipate that our underlying EPS for the fourth quarter of fiscal 2014 will be at or slightly below the low end of our range of $1.60 to $1.70,” said Charles Holley, Wal-Mart Stores, Inc. chief financial officer. “For the full year, we expect underlying EPS to be at or slightly below the low end of our range of $5.11 to $5.21.

“Today, we are providing updated information on previously disclosed items, as well as new additional discrete items that were not anticipated when we provided our fourth quarter and full year guidance. These discrete items will impact EPS results for the fourth quarter and the year,” said Holley.

It wasn't just the weather though. The company also listed the following factors:
Detailed explanation on discrete items:

• Brazil and China store closures: Approximately 50 underperforming units between these two markets were closed.
• India transaction: Walmart terminated the franchise and supply agreements related to retail stores. The estimated charge for this transaction is now approximately $0.05 per share versus the previous estimate of $0.04 per share.
• Brazil non-income tax contingencies: The company is subject to tax examinations for non-income taxes in Brazil. A number of these examinations are ongoing, and in certain cases, have resulted in assessments from taxing authorities, some of which we are currently contesting. As part of the company’s standard review process and as a result of changing conditions and circumstances, the company expects to record additional liabilities related to these loss contingencies.
• Brazil employment claim contingencies: We expect to record additional charges related to employment claims. Walmart Brazil has experienced a significant increase in employment claims in recent years as a result of company efforts to improve productivity and reduce costs. The company has performed a detailed review of potential liabilities related to these claims, as well as a review of our historical processes and practices related to accounting for court deposits required to litigate such claims. As a result of this review, the company expects to record charges to increase our liabilities and account for settlements of historical employment claims.
• China store lease expense charges: We identified a historical lease accounting practice that did not conform to our U.S. GAAP-based global policies. As a result, the company expects to record a charge to conform to this accounting practice.
• Sam’s Club U.S restructuring and club closure.: Sam’s Club is implementing a new in-club leadership and staff structure to better align U.S. club teams with the sales volume of each club, and expects to record a charge for severance-related costs. Additionally, one club is being closed.

Well, there's always a reason.