Walmart earnings for Q1’18 are set to release tomorrow. The retail sector is observing a growing trend of the shift to online commerce. Retail players are facing increasing competition from Amazon, that, according to estimates, accounts for more than half of online spend in the US. After bigwigs like Macy’s and JCP missed estimates, it remains to be seen if Walmart will buck the downtrend.

Expected revenues of $117.8bn, up 1.7% from last year. Expected same-store sales growth: 1.4%

Walmart has been investing in modernizing its stores to increase traffic.To counter competition from Amazon, it is also developing its e-commerce segment. It bought online retailer last year and has acquired a few more since then. It is taking initiatives to improve online customer experiences like lower minimum order amount for free delivery and store pickup discounts. All these efforts are expected to drive revenues this quarter. Growth in top line and same-store sales could indicate Walmart’s success with these initiatives

Expected EPS of $0.96, down 2% from last year

A strong dollar has been impacting the performance of its international segment and is expected to weigh on EPS. Investments to counter competition in e-commerce segment from Amazon will also squeeze margins.Besides, there is intense price competition in the grocery segment from German discount grocer Aldi that is aggressively expanding in the US. Given that grocery contributes to ~50% of Walmart’s revenues, efforts to counter price competition will further reduce margins. Investors will want to hear about cost control measures being taken by Walmart to offset these margin pressures.

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