With spring comes a new earnings season, and Wal-Mart Stores (NYSE:WMT) is set to announce quarterly results on May 15. Look for changes in operating expenses, same-store sales, and average ticket size to gauge how much certain economic factors are affecting the top and bottom lines.

Wal-Mart's expectations
"We expect first quarter fiscal year 2015 earnings per share from continuing operations to be between $1.10 and $1.20," according to the company's last earnings report. But there's a caveat: "We expect economic factors to continue to weigh on our outlook," said Charles Holley, the CFO.

Wal-Mart isn't alone, as large-box stores have had a difficult time over the past two years. Big Lots (NYSE:BIG) recently published its eighth consecutive quarter of declining same-store sales.

Change in strategy
Both Wal-Mart and Big Lots have the same issue: same-store sales declines. Wal-Mart is the largest retailer in the world, and Big Lots is the largest closeout retailer in North America. But same-store sales for both have been on a steady decline. Reductions in food stamp benefits and heavy price competition from small-box dollar stores have made it harder for both companies to maintain market share without sacrificing margins.

A new strategy is needed to grow both the top and bottom lines. For Big Lots the new strategy is a rent-to-own program to help boost furniture sales. Wal-Mart has opted for a different approach.

Instead of providing furniture financing, Wal-Mart is offering its customers smaller stores. In February, the company announced the acceleration of its small-store expansion program. These stores are the key to Wal-Mart's long-term growth because they allow it to grow into new markets without cannibalizing super-center sales.

The most ingenious aspect of the strategy is the use of super-centers as distribution centers, which increases the return on super-center square footage. It is this powerful combination that has the potential to supercharge earnings in the long run. Bill Simon, head of U.S operations, said: 

Neighborhood Markets continued to deliver consistent[,] solid comp sales growth, and customers appreciate the convenience of our small stores. They are a proven model.

The degree to which Wal-Mart can meet or beat earnings estimates will be a function of how fast it can implement its small-store expansion plan. Any delays will also postpone improvements in both same-store sales growth and the operating margin. 

Same-store sales growth
For the 13-week period ending May 2, Wal-Mart U.S. expects comp-store sales to be relatively flat. Last year, Wal-Mart's comp sales declined 1.4% for the 13-week period ended April 26, 2013.

We already know the quarter started off poorly due to severe winter weather, but Simon seemed hopeful on the last earnings call, saying:  

At the height of the storm, we had more than 200 stores closed. We're optimistic about the balance of the quarter and believe we will have a positive sales comp for the rest of the period.

Look for positive same-store sales growth this quarter along with a slight increase in average ticket size for signs of top-line growth with bottom-line benefits.

Operating margin
Any company can grow sales if it sacrifices margin. Last year operating-margin results were flat for Wal-Mart U.S but dismal for Wal-Mart international and Sam's Club. While Wal-Mart U.S. grew the operating margin by 0.1% last year, Wal-Mart international's operating margin declined by 45.8% and Sam's Club's fell by 15.3%. David Cheesewright, president of Wal-Mart's international segment, said: 

The combination of soft sales, price investments, higher expenses, and investments in e-commerce caused [Wal-Mart international's] operating income to decrease on a reported and constant currency basis.

Walmart Revenue Penetration

Source: Wal-Mart 10-K

As you can see from the sales-penetration chart above, Wal-Mart US comprises almost 60% of the company's revenue; Wal-Mart international and Sam's Club represent 29% and 12% of the company's revenue, respectively, or 40% combined. Look for an improvement in operating income across the board but specifically in Wal-Mart international and Sam's Club for signs of progress in the next earnings release. Any increase in the average ticket size will also contribute to a higher operating margin. 

The bad news is that customer loyalty is fickle in the discount-retail marketplace, and large-box retailers like Wal-Mart are losing market-share. The good news is that Wal-Mart's under new leadership. Doug McMillon, the CEO, is loyal to Wal-Mart -- he started out as an intern in the distribution center and has a proven track record for success.

Wal-Mart surprised analysts three times last year with earnings announcements below the consensus average, but this year may be a different story as the company focuses on initiatives that will help both top- and bottom-line growth.

C Bryant has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.