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What Went Wrong in Walmart’s Success Story?

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On Thursday, Walmart (NYSE: WMT) posted a record $152 billion in fourth quarter sales, but U.K. tax charges trimmed its bottom line and planned investments resulted in weaker-than-expected fourth-quarter earnings. Along with tepid fiscal-year outlook, shares went down.

Figures

Group revenues rose 7.3% from last year as they amounted to $152.08 billion, exceeding analysts’ estimates of $148.3 billion. U.S. same-store sales rose 8.6% compared to last year, strongly topping Refinitiv’s 5.8% forecast.Although e-commerce sales in the U.S. grew by 69%, this is the slowest growth rate since the global health crisisstarted. If we look at 2020 as a whole year, they rose 79%.

The world’s biggest retailer said adjusted earnings for the three months ended in January came in at $1.39 per share, missing the consensus forecast of $1.50 per share. U.S. shoppers continued to favor big-box retailers over smaller rivals but it wasn’t enough to offset the planned surge in investment costs. Although the pandemic trends were beneficial for the big-box retailer that also benefited from many customers spending their stimulus checks, the pandemic also brought Covid-related expenses of $1.1 billion during the quarter.

Walmart’s success was also the result of investments in its online business long before COVID-19 started its relentless march across the US. Thanks to these efforts, it could provide curbside pickup and speedy delivery in a crucial time.The company’s goal is to turn the e-commerce strength achieved during the health crisis into lasting momentum that will result in higher profits. But in order to do that, Walmart needs to invest in these efforts.

2022

2022 financial year sales are expected to rise by only low single digits, with operating income and earnings to be flat to up slightly as Walmart pledged to lift average employee wages to $15 per hour and boost total capital expenditures to $14 billion, up from a rate of $10 billion to $11 billion, as it invests in supply chain, automation and improvements to the customer experience. Although the bottom-line delivery is disappointing, the company believes the underlying health of the business remains intact and top-line guidance suggests continued momentum.

Novelties ahead

Walmart CEO Doug McMillon revealed the company is retooling its business to better serve customers, tap new revenue streams and create a diverse ecosystem of services. It will not only deliver groceries to people’s fridges, but also include annual health checkups and new financial services. The retailer also plans to step up its advertising and overall game to adjust to the new retail normal the pandemic has created, such as spending on automation to gain in speed and increase the number of orders it can fill.

Outlook

Last month, Walmart lost one of its most important executives as Marc Lore, who is credited for turning it into the nation’s second-largest online retailer behind Amazon (NASDAQ: AMZN) by reviving the e-commerce strategy, announced his retirement. Perhaps it wouldn’t look that scary if this wasn’t the second major departure of an e-commerce executive within a year, as Jamie Iannone left to take on the CEO role at EBay Inc. (NASDAQ: EBAY). There’s no arguing that Walmart benefited from the pandemic and that its efforts paid off, but it remains to be seen if the big box retailer can keep up the momentum with rising investments and without two of its leading men.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

BenzingaEditorial

Johnson & Johnson’s Vaccine Is on Hold But lts Businesses Emerged Healthier From the Pandemic

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On Tuesday, Johnson and Johnson (NYSE: JNJ) reported $100 million in first-quarter sales of its single shot Covid-19 vaccine that’s on hold in the U.S. due to a rare and potentially life-threatening blood clotting disorder which has been also related to AstraZeneca (NASDAQ: AZN) vaccine which still hasn’t been approved for emergency use in the U.S. But on the financial side, the company exceeded Wall Street estimated both in terms of revenue and earnings.

First quarter figures

Adjusted EPS amounted to $2.59 per share, exceeding the expected $2.34. Revenue amounted to $22.32 billion, also topping the expected $21.98 billion.

The pharmaceutical business behind the vaccine generated $12.19 billion in revenue. Sales sales of the company’s multiple myeloma drug and a treatment for Crohn’s disease also did their part in fueling the 9.6% YoY increase.

The consumer unit which makes products such as Neutrogena face wash and Listerine mouth wash, generated $3.5 billion in revenue. The drop of 2.3% from a year earlier was due to an “unfavorable comparison” to last year when people were stockpiling on over-the counter- products due to the pandemic-induced lockdowns.

The medical device unit was hit hard last year as hospitals were forced to postpone elective surgeries but it now generated $6.57 billion, a 7.9% increase, as the pandemic recovery is underway.

The FDA halts JNJ’s vaccine production

On Wednesday, The US Food and Drug Administration put the production of Johnson & Johnson’s vaccine on pause at the Emergent BioSolutions facility where millions of potential doses were contaminated.

Already manufactured vaccines will undergo additional testing to ensure their quality hasn’t been compromised before any potential distribution. According to the report, the emergent facility is deeply flawed as written procedures to prevent cross-contamination weren’t followed during production or documented. Components and product containers were not handled or stored in a way to prevent contamination whereas written procedures to assure drug substances are manufactured at the appropriate quality, strength and purity were found inadequate. The report also notes that employees weren’t properly trained and that the facility is of inadequate size or design to allow adequate cleaning and sanitization. Besides unsuitable equipment, the inspection noted peeling paint, unsealed bags of medical waste, residue on walls and damaged floors and rough surface all of which prevent pursuing the intended protocol.

Meanwhile, JNJ is confident about emerging stronger from the pandemic

The CFO, Joseph Wolk told CNBC on Tuesday that the three business segments are “healthier” than they were before COVID-19 shaped our reality last year. The company slightly raised its earnings and revenue guidance for the year as it now expects full-year profit in the range between $9.42 to $9.57 per share with revenue between $90.6 billion and $91.6 billion.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

It Seems Netflix Has Been Dethroned

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Netflix (NASDAQ: NFLX) shares fell as much as 11% in after-hours trading after the streaming giant reported a large miss in subscriber numbers in its first-quarter earnings report. The facts that revenue still grew on a YoY basis along with a strong beat on earnings were not enough to offset the weak number of subscriber additions, especially as management only expects 1 million new subscribers in the undergoing quarter.

First quarter figures

Revenue amounted to $7.16 billion, slightly topping $7.13 billion expected, resulting in earnings per share of $3.75 that exceed the expected $2.97, as gathered by Refinitiv. Global paid net subscriber additions came at 3.98 million which is significantly below the 6.2 million expected, according to FactSet. This figure seems even more pessimistic compared to a quarterly record of 15.8 million new paying users it gathered during the first three months of 2020.

Still, the company’s revenue grew 24% YoY and was in line with its beginning of quarter forecast. Netflix also delivered a strong beat on earnings compared to Street estimates. Operating income for the quarter came in at $1.96 billion which is more than double $958 million in the year-earlier period. Moreover, as content spending was lower, it resulted in a 27% operating margin which is an all-time high for the first quarter.

Netflix is losing subscribers

Netflix believes that the shortfall subscriber numbers could be blamed on the ongoing pandemic or more precisely on its smaller pipeline of originals as COVID-19 restrictions forced the company to delay some of its big-name shows and films. It doesn’t believe that competition from Walt Disney Company’s (NYSE: DIS) Disney+ and Hulu, AT&T’s (NYSE: T) HBO Max, Apple’s (NASDAQ: AAPL) Apple TV+ , Amazon’s (NASDAQ: AMZN) Prime video and Comcast Corporation’s (NASDAQ: CMCSA) NBCUniversal’s Peacock played a factor in the weak subscriber numbers. But the reality is that Netflix is facing an increasing set of competitors in the streaming space with HBO Max having reached 41 million U.S. subscribers two years ahead of schedule in January this year and Disney+ topping 100 million global subscribers as of early March, ballooning to about half of Netflix’s 208 million worldwide subscribers only within a year-and-a-half of its launch.

The key is the business remains healthy and that it keeps growing

To respond its competitors, Netflix expects to spend more than $17 billion in cash on content this year. Production is up and running in nearly all of its major markets and While ramping up content spending more than 44% compared with $11.8 billion last year, Netflix is also trying to combat password sharing. Historically, it wasn’t concerned about this issue as subscriber growth and stock price were easily offsetting concerns around lost revenue. But, things changed as Netflix has found itself amid intense ‘streaming wars’.

Netflix’s board approved a buyback program to repurchase up to $5 billion in common stock, beginning in 2021 with no fixed expiration date. The program is expected to begin during the quarter.

The winner of the streaming wars is still unknown

While Netflix matures in terms of subscriber growth, its business has also become increasingly efficient from an operating standpoint, despite channeling billions into content creation. After posting its first full-year of positive free cash flow since 2011 last year, it believes it is “very close to being sustainably” free cash flow positive.  As for 2021, it expects free cash flow to be around breakeven while no longer having to raise external financing for its day-to-day operations.  In other words, it’s been more than a year that streaming wars intensified and all players are investing heavily to be on the winning side even after the world successfully combats COVID-19.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Coca Cola Made a Sparkling Recovery

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Coca-Cola’s (NYSE: KO) business was hit extra hard during the COVID-19 pandemic as people avoided gatherings with events being cancelled across the globe. As its business model is heavily reliant on these point-of-sale drinks, the pandemic translated into sharp volume drops for fiscal 2020 while peers like PepsiCo (NASDAQ: PEP) enjoyed booming demand at supermarkets and warehouse retailers. However, on Monday, the beverage giant showed it rebounded by beating on earnings with demand in March hitting pre-pandemic levels.

Fiscal first-quarter

Net sales rose 5% as they amounted to $9.02 billion, exceeding estimates of $8.6 billion. Organic revenues grew 6%, but unit case volume was flat compared to a year earlier. Demand improved every month of the quarter, driven by markets like China where uncertainty concerns around the virus eased.

Coca Cola reported a net income of $2.25 billion, or 52 cents per share. This is a drop compared to last year’s $2.78 billion, or 64 cents per share. Excluding items, earnings amounted to 55 cents per share, exceeding the 50 cents per share expected by analysts surveyed by Refinitiv.

Coca Cola has done a great job focusing on what it can control

Through the pandemic, executives slashed costs by finding ways to cut supply chain, marketing, production and packaging expenses, leading to rising profitability even as peer PepsiCo’s margins fell.

At the beginning of the year, management said the first quarter would be the hardest of the year, but that the scale of the recovery that follows would depend on big variables like the pace of vaccine distribution.

Unchanged demand

Quarterly demand was unchanged from a year earlier as North America and Western Europe take longer to recover from the pandemic but global unit case volume in March returned to 2019 levels.

While the central North American business is still under pressure, growth in India, China and Latin America managed to offset those declines. Nutrition, juice, dairy and plant-based beverage segment experienced a 3% volume growth as it was fueled by higher demand in China and India. Hydration, sports, coffee and tea segment was the hardest hit with volumes shrinking 11%. The coffee business declined 21% as Costa cafeswere heavily impacted by the lockdowns. The hydration category that includes Dasani and Smartwater reported volume declines of 12% as consumers across the globe bought less single-use water bottles. Demand for tea products fell 6%, whereas sports drinks saw volume decline slightly by 1%.

Uncertainty still remains

Back in February, management stated that the giant has positioning itself to come out of the crisis targeting faster growth and higher margins compared to its pre-pandemic figures.

The company restated its full-year forecast, with organic revenue growth expected in high single digits and adjusted earnings growth expected in the range between high single digits to low double digits. India and parts of Europe are reintroducing lockdowns due to spikes in new Covid-19 cases, while Latin America and Africa are expecting slower vaccine distribution and embracing for new waves. While vaccinations are rising in many countries such as the U.S., U.K., the flip side is there’s actually a new high in terms of cases as the weekly number of new cases has just hit an all-time peak.

Although April has started well for Coke, the looming risk of new lockdowns threatens to reverse that progress.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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