* Wal-Mart to report results before market open on Feb. 22
* Wall St expects Q4 EPS $1.31, revenue $117.68 bln
* U.S. sales in the spotlight
By Jessica Wohl
CHICAGO, Feb 22 Wal-Mart Stores Inc
investors are eager to see whether management made good on the
claim that the company's biggest business, its namesake U.S.
discount chain, would finally see sales turn the corner.
Under Chief Executive Mike Duke and new U.S. chief Bill
Simon, the world's largest retailer is stocking more goods and
has a renewed focus on consistently low pricing.
Tuesday's quarterly results will show whether the fresh
management team at the U.S. discount chain was able to make a
difference in the key fourth quarter.
While Wal-Mart has expanded into more than a dozen countries
and is ripe for further international growth, the U.S. stores
still represent the lion's share of its business.
Nearly 64 percent of its $405 billion in fiscal 2010 sales
came from the U.S. discount stores, and they are key to pleasing
"The U.S. business has to remain healthy or the stock price
isn't going to be healthy, and that's the trick at this point in
time," said Patty Edwards, chief investment officer of Trutina
Shares of Wal-Mart have risen 2.7 percent since the
beginning of the year, trailing gains of about 7 percent in the
Standard & Poor's 500 index and the Dow Jones industrial
Four analysts have downgraded Wal-Mart's stock since the
beginning of 2011. Many said they were concerned about sales at
stores open at least a year at its U.S. discount chain.
The company made a bold suggestion in November, when it said
fourth-quarter same-store sales at its namesake U.S. stores
should rise, even though its official forecast suggested a
decline of 1 percent to a rise of 2 percent.
After some tough winter storms and higher food and gasoline
prices, Wal-Mart must now show whether such sales grew, or if it
chalked up its seventh consecutive quarterly decline.
BIGGEST QUARTER OF THE YEAR
The fourth quarter is Wal-Mart's largest in terms of revenue
and profit. Analysts, on average, expect Wal-Mart to post a
fourth-quarter profit of $1.31 per share on $117.68 billion in
revenue, according to Thomson Reuters I/B/E/S.
Several other U.S. retailers will issue results this week,
including Home Depot Inc and Macy's Inc on Tuesday.
Wal-Mart trades at 12.4 times expected earnings, just ahead
of smaller rival Target Corp's 12.2 times expected
profit. Target is due to report results on Thursday.
Wal-Mart is reasonably valued at that level, which is below
its five-year average of 14.1 times expected earnings, according
to JP Morgan analyst Charles Grom, who downgraded the stock to
"neutral" earlier this month.
Analysts and investors want to hear more about Wal-Mart's
plans to enter more cities, such as New York, with small stores.
Meanwhile, Wal-Mart stands to benefit if shoppers choose to
buy more groceries at its stores as prices rise. As the largest
U.S. grocery retailer, it must react to chains such as Family
Dollar Stores Inc selling more food as prices for
groceries and gasoline pressure low-income shoppers.
"This theoretically could be one of those times when
Wal-Mart could win but it depends on how they've played their
hands and I'm just not 100 percent certain that they've really
played this one as well as they could have," Edwards of Trutina
(Reporting by Jessica Wohl; Editing by Richard Chang)