Wal-Mart is expected to post sales at the low end of its guidance and flat earnings per share when the world’s largest retailer delivers its second-quarter results tomorrow (13 August).

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Consensus estimates place EPS at the same level as the second quarter of last year – US$0.86 per share. Wal-Mart’s EPS guidance range is $0.83-88.


However, some analysts view consensus estimates as a little optimistic. JP Morgan’s Charles Grom lowered his second-quarter earnings guidance from $0.86 to $0.84 per share.


Analysts have said revenue is expected to increase slightly, rising to $103.08bn, up from $101.6bn last year.


Wal-Mart has indicated that its US comparable sales are expected to be between flat and positive 3% due to food deflation.

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“The traditional grocers, Safeway Inc and Supervalu in particular, have spoken to significant food deflation – a phenomenon that Wal-Mart was likely unable to avoid,” Grom wrote in a note to investors.


Wal-Mart has benefited from the US recession, attracting new, more affluent consumers. Management has previously stated that it anticipates that it will retain these new customers as loyal shoppers when the economic picture improves.


In order to achieve this, Wal-Mart is investing heavily in revamping its existing US stores, with plans to remodel 500-600 each year over the next five years.


Grom concurred that there is currently “no evidence” of consumers trading up. This, he said, “positions Wal-Mart well” throughout the rest of 2009 and into 2010.


Wal-Mart shares closed up yesterday, rising from an open of $49.71 to close at $50.04.