Alcoa Corp
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Materials : Metals & Mining | Small Cap Value
Company profile

Alcoa Corporation (Alcoa) is engaged in the production of bauxite, alumina and aluminum of various cast and rolled products. The Company’s operations consist of three reportable business segments: Bauxite, Alumina, and Aluminum. The Bauxite and Alumina segments primarily consist of a series of affiliated operating entities held in Alcoa World Alumina and Chemicals (AWAC), which is a joint venture between Alcoa Corporation and Alumina Limited. The Aluminum segment consists of the Company’s aluminum smelting, casting, and rolling businesses, along with the energy production business. Its Bauxite segment consists of the Company’s global bauxite mining operations. The Company’s Alumina segment consists of the Company’s worldwide refining system, which processes bauxite into alumina. The Aluminum segment consists of its worldwide smelting and casthouse system, a rolling mill in the United States, and a portfolio of energy assets in Brazil, Canada, and the United States.

Closing Price
$7.41
Day's Change
0.15 (2.07%)
Bid
--
Ask
--
B/A Size
--
Day's High
8.02
Day's Low
7.22
Volume
(Heavy Day)
Volume:
13,298,826

10-day average volume:
10,869,633
13,298,826

UPDATE: Walmart expects to save $60 million annually on shopping bags

10:44 am ET February 22, 2020 (MarketWatch)
Print

By Tonya Garcia, MarketWatch

Walmart reported a fourth-quarter earnings and revenue miss and coronavirus should take a bite out of Q1 earnings

Walmart Inc. is saving big bucks on an unexpected part of the business: shopping bags.

The world's largest company by revenue expects to save $60 million annually on plastic shopping bags, "just by changing our buying process and better utilizing our scale," Chief Financial Officer Brett Biggs said.

The remarks were made after the retail giant announced its fourth-quarter earnings on Tuesday. The earnings announcement also fell on the same day as the company's investment community event.

Biggs also said the company is saving 15% on the cost of vests worn by sales staff, which are made with recyclable materials. Biggs said the vests are "more comfortable and more sustainable."

See:Walmart to shut down Jetblack shopping service (http://www.marketwatch.com/story/walmart-to-shut-down-jetblack-shopping-service-2020-02-13)

This isn't the first time Walmart (WMT) has announced savings from a random corner of the business. Back in October 2018, the company said it would save $20 million annually (http://www.marketwatch.com/story/walmart-will-save-20-million-annually-on-floor-wax-2018-10-17) by switching to a new floor wax that was cheaper and made it possible to buff the floors fewer times.

While Walmart is anticipating big savings on shopping bags and associate uniforms, the impact of the coronavirus is still to be determined.

Read:Apple's coronavirus warnings wasn't a total surprise but magnitude rattles Wall Street (http://www.marketwatch.com/story/apples-coronavirus-warning-wasnt-a-total-surprise-but-magnitude-rattles-wall-street-2020-02-18)

Biggs said the company anticipates a "couple of cents negative impact" in the first quarter from the coronavirus outbreak. The impact of the outbreak wasn't included in Walmart's fiscal 2021 outlook.

Walmart is guiding for earnings per share of $5.00 to $5.15, up 1.5% to 4.5% from fiscal 2020 adjusted EPS, e-commerce growth of around 30% and Walmart U.S. same-store sales growth of at least 2.5%, excluding fuel.

The FactSet consensus is for EPS of $5.21 and domestic same-store sales growth of 3%.

Also:E-commerce surge sparks questions about reliability of same-store sales metric (http://www.marketwatch.com/story/e-commerce-surge-sparks-questions-about-reliability-of-same-store-sales-metric-2020-01-28)

Fourth-quarter earnings and revenue fell short (http://www.marketwatch.com/story/walmart-misses-on-fourth-quarter-earnings-as-guidance-shy-of-forecast-2020-02-18), which Chief Executive Doug McMillon attributed to a variety of factors, including the shortened holiday shopping season, the shift to e-commerce and the lack of a hot toy.

Walmart raised its dividend (http://www.marketwatch.com/story/walmart-raises-dividend-2-2020-02-18) by 2%.

"Walmart's Q4 performance, which we characterize as tepid overall, indicates that the holiday season was if anything even more promotional than we anticipated, with its U.S. operating margin down around 75 basis points for the quarter, some of which was due to mix as lower margin food sales were strong while higher margin apparel was weak, some due to softness in key holiday categories such as toys, and some due to increased expenses around delivery," said Charlie O'Shea, Moody's lead Walmart analyst.

GlobalData Managing Director Neil Saunders notes that the holiday challenges at Walmart weren't unique to that retailer. Target Corp. (TGT) , for instance, talked about the bigger-than-expected challenges (http://www.marketwatch.com/story/targets-holiday-weakness-in-electronics-drags-down-best-buys-stock-2020-01-15) of the shortened holiday season.

However, Walmart saw some cannibalization from its e-commerce business, which grew 35% in the fourth quarter, with customers opting for a digital purchase rather than going to stores, Saunders said.

Amazon.com Inc. (AMZN) didn't help either.

"Competition from Amazon heated up across multiple categories as its spending initiatives further heightened promotional activity as it drove sales above management's forecast, though in doing so it 'sacrificed' around 150 basis points of margin for the quarter," Moody's O'Shea said.

What also hurt was unrest in Chile, with Biggs saying that some stores in that country were destroyed during political protests. The business there is not expected to recover in the coming fiscal year.

Disruption in Chile coupled with a legal matter cost 5 cents per share in the fourth quarter. Chile hurt operating income by about $110 million.

Don't miss:Coronavirus could drive up out-of-stocks at stores by April: Wells Fargo (http://www.marketwatch.com/story/coronavirus-could-drive-up-out-of-stocks-at-stores-by-april-wells-fargo-2020-02-11)

"Overall, we think Walmart likely wasn't immune from some of the near-term pressures like a shortened holiday season that impacted competitors such as Target during the holiday season," wrote UBS analysts led by Michael Lasser.

"Still its early guidance leads us to believe that its current year-to-date performance in February has been strong and it's well positioned to take further share."

UBS rates Walmart stock neutral with a $125 price target.

Walmart stock is up 18.4% over the last year. The Dow Jones Industrial Average has gained 13% for the period.

-Tonya Garcia; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires

February 22, 2020 10:44 ET (15:44 GMT)

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