Toward the end of last year, Warren Buffett’s Berkshire Hathaway dumped $900 million worth of Wal-Mart stock. It was the fourth consecutive quarter it had pared its position, according to federal filings. The move supports the concerns The Sage of Omaha and others have voiced about the world’s largest retailer and its uphill battle against online behemoth Amazon.
While Wal-Mart has taken substantial steps to improve its e-commerce operations, tomorrow’s earnings report for the key holiday season may likely show just how much further it still has to go.
Analysts polled by FactSet estimate fiscal fourth-quarter earnings of $1.29 a share, down from $1.49 a year earlier. Revenue for the period ending in January is expected to have risen 1% to $131.1 billion.
Wal-Mart has a long road ahead. The company generated $3.6 billion in e-commerce sales in the third quarter, only 3% of its total revenue. By comparison, Amazon logged $43.7 billion in its most recent reported quarterly revenue.
And, political turbulence, which already has taken a toll on Wal-Mart’s shares, threatens to make business conditions more difficult. The strong dollar has hurt Wal-Mart internationally since it gets roughly one-quarter of its total revenue from overseas, with Mexico being a key contributor. Wal-Mart has 2,373 stores in Mexico, roughly 20% of its locations.
Retailers including Wal-Mart have tons to lose if Trump imposes new tariffs on trade or a border-adjusted tax. That is because many of them rely heavily on overseas factories for the goods they sell.
More drama from our 45th president in the coming days…
Lobster on the Prairie 