Wal-Mart's McMillan Needs To Communicate Its Strategy To Investors

Wal-Mart WMT will report its first quarter 2015 results on Thursday after market close. Analysts are expecting the behemoth global retailer to earn $1.15 per share on revenue of $116.29 billion.

Investors were left unimpressed when Wal-Mart reported its fourth quarter 2014 results on February 20. At that time, the company earned $1.60 per share, coming in a penny above what analysts were expecting. Revenue of $129.7 billion represented a two percent appreciation from the same quarter the year prior but fell short of what analysts were expecting by $740 million.

During the fourth quarter, comparable store sales growth at Wal-Mart declined in the U.S. by 0.4 percent while Sam's Club saw its comparable store sales growth decline 0.1 percent.

Wal-Mart announced that it will open an additional 270 to 300 Express stores following positive results with an initial 20 locations. Investors will pay close attention to management's comments as the initiative is expected to boost Wal-Mart's capital expenditure from $11.8-12.8 billion to $12.4-13.4 billion.

Wal-Mart guided its first quarter 2015 earnings per share to be in a range of $1.10 to $1.20, roughly in the midpoint of the $1.14 per share it earned in the first quarter 2014.

Paul Trussell of Deutsche Bank says that Wal-Mart shares benefited recently from being considered a “flight to safety.” However, this is no reason for investors to jump in to the stock as incoming CEO Doug McMillan hasn't laid out a sufficient vision for comps acceleration, e-commerce investments and the “next steps” for the International division.

“We believe the environment remained very difficult in the first quarter as showcased by decelerating Nieslen and ICSC/Redbook sale trends,” Trussell wrote in a note to clients on May 12.

Perhaps more important than a single quarter's results, Trussell will be “intently focused” on Wal-Mart's conference call to hear McMillan's strategy for the future.

After all, Trussell does believe that Wal-Mart's future is “potentially brightening” due to a growing e-commerce business and small store expansion.

Trussell is projecting Wal-Mart will post a profit of $1.17 per share on revenue of $117.295 billion in the first quarter.