ISI: Wal-Marts Gross Margins Down, Inventory and Traffic Up

According to a research report published today by ISI, Wal-Mart Stores (NYSE: WMT) has succeeded in keeping traffic consistent throughout its US stores.

In the report, ISI mentioned, “WMT's 4Q EPS of $1.44 came in $0.03 below our estimate, and $0.02 below the Street. The +1.5% Walmart U.S. comp and traffic turning positive for the first time since ISI Est 3Q09 are clear positives, yet 35bps of global gross margin pressure drove a 10bp EBIT margin contraction vs our outlook for flattish EBIT margins. Initiatives of lay-away, multi-channel integration, and expanded assortment have turned traffic and comps. Yet the investment in gross margin, inventory and resulting muted EPS guidance will keep the stock in check.”

ISI maintains its Hold rating and $64 PT on Wal-Mart, which closed Friday at $62.48.