Wal-Mart (WMT 0.44%) will release its quarterly report on Thursday, and investors haven't been all that optimistic about the company's holiday season lately. With Amazon.com (AMZN 1.13%) having made further progress in shifting shopping habits toward online retail, Wal-Mart might not be able to gain much ground even as rival Target (TGT 1.62%) has suffered huge reputational damage from its card-hacking incident.

Wal-Mart was one of the biggest growth stories of the late 20th century, rising from a simple local store to become the biggest retailer in the world. With its huge workforce and buying power, Wal-Mart is an economic force in itself, spurring debate on issues from minimum-wage laws to the advantages and disadvantages of big-box retailers versus locally owned stores. Still, investors are most concerned about whether Wal-Mart can keep growing amid changing economic conditions. Let's take an early look at what's been happening with Wal-Mart over the past quarter and what we're likely to see in its report.

Source: Wal-Mart.

Stats on Wal-Mart

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$130.37 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

What's next for Wal-Mart earnings this quarter?
In recent months, analysts have cut back on their views about Wal-Mart earnings, reducing estimates for the quarter ended in January by a nickel per share and cutting fiscal 2015 projections by almost twice that amount. The stock has also given up ground, falling 4% since mid-November.

Wal-Mart's fiscal third-quarter results didn't set the stage for strong performance, as the company saw same-store sales in its U.S. division fall for the third straight quarter, dropping 0.3%. Despite beating earnings estimates and posting a modest 1.6% climb in sales, Wal-Mart cut guidance for the full fiscal year again, guiding investors toward the bottom half of its previous range. Still, the stock didn't react much in either direction to the report, reflecting the extent to which investors have already taken into account Wal-Mart's long-term woes.

Yet many are even more concerned about the prospects for Wal-Mart's holiday quarter, especially after the updated guidance it gave late last month. Wal-Mart said its earnings results would be at the low end or slightly below its previous range for the fourth quarter and full fiscal 2014 year, and that same-store sales in the U.S. will likely be worse than the break-even results initially expected. Even with Target hurting following its data breach, the fact that Wal-Mart doesn't expect to have poached any of its competitor's disgruntled customers is a bad sign for the retailer.

Online sales jumped during the holiday quarter, and that also gave Amazon a competitive edge over Wal-Mart. But Wal-Mart isn't ready to cede the online space to Amazon just yet. Even though it expects to reap less than 15% of the online sales that Amazon made in 2013, Wal-Mart is making substantial investments in technology. Wal-Mart's tech labs have helped develop some interesting initiatives for the retailer, including social-media mining and collecting feedback directly from customers. Moreover, Wal-Mart has looked closely at same-day delivery alternatives that could use the extensive reach of its network of stores and distribution centers.

Still, distractions are taking Wal-Mart's attention away from its growth-driving efforts. A rise in attention to minimum-wage laws and income inequality has contributed to labor problems at Wal-Mart, and an ongoing bribery investigation of its international division has hurt the retailer's reputation.

In the Wal-Mart earnings report, watch to see if the company points to solid strategies to reverse its recent lack of growth. Bad weather will likely play a role in the quarterly results this time around, but Wal-Mart needs to be more aggressive if it wants to stand up to Target and Amazon and reestablish itself not just as the giant in the retail space but also as a growth leader.

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