Walmart, the largest retailer in the United States, is expected to report first-quarter earnings of $1.31 per share on revenue of $148.7 billion.[0] Analysts will be closely watching for insights into consumer behavior and shopping trends.[1] Walmart is projected to report a rebound in earnings due to solid growth in same-store sales, as cash-strapped consumers spend more on necessities amid an economic slowdown and persistently high inflation.[2]
Walmart’s strong results contrast with Target and Home Depot’s weaker figures during their latest quarters. It is anticipated that Target will announce profits of $1.76 per share with revenue totaling $25.29 billion.[3] Despite revenue remaining relatively unchanged compared to the previous year, there is a considerable decrease in projected earnings.[4] In the first quarter of 2022, Target missed estimates of $3.07 per share, turning in disappointing earnings of just $2.19 per share.[3]
Walmart’s grocery sales increased by low double-digits last quarter, with food prices climbing in recent years.[5] Wealthier households have been shopping in Walmart stores more frequently, while other shoppers are trading down into Walmart’s cheaper private-label food brands to save money.[6] Walmart Connect advertising, which uses the company’s e-commerce presence to provide an ad channel for consumer products companies and other businesses, grew nearly 40%. Walmart witnessed an increase in its grocery market share as affluent households switched to the retailer in response to inflationary pressures. The levels of inventory decreased to a more favorable state.[6]
Sales at stores open for at least one year increased 7.4% during Walmart’s latest quarter compared with the same stretch last year. The last quarter saw a 17.3% increase in its operating income.[7] Amidst economic difficulties, Walmart typically showcases exceptional performance. During a call with analysts, Walmart CEO Doug McMillon stated that customers are still searching for value due to the effects of inflation.[5] According to the company, there was a slow performance in the sales of non-essential items including home goods, electronics, and apparel.[8]
Walmart revised its guidance to account for exceeding earnings expectations.[9] The company predicts that its combined net sales will increase by approximately 3.5% during the fiscal year. It expects adjusted earnings per share for the full year will be between $6.10 and $6.20, roughly in line with analysts’ expectations.[9] Walmart anticipates a 4% rise in its combined net sales for the second quarter, while its operating income is expected to decrease by approximately 2%. It is expected that the consolidated net sales will grow by approximately 3.5% for the entire year, and the operating income is expected to rise between 4% and 4.5%.
Walmart’s member-based warehouse banner Sam’s Club reported same-store sales, excluding fuel, of 7% during the first quarter, led by a 4% jump in average ticket.[10] The curbside pickup service drove a 19% growth in e-commerce sales.[10]
The financial success of Walmart was attributed to several initiatives.[6] Walmart Connect advertising grew nearly 40%. The retailer gained market share in its grocery segment, seeing higher-income households respond to inflationary pressures by switching to Walmart. The levels of inventory decreased to a more favorable state.[6] Walmart has been gaining from its sturdy comp sales record, which is driven by its constant expansion efforts and splendid e-commerce performance.[11] Walmart has been undertaking several efforts to enhance merchandise assortments and store remodeling in an attempt to upgrade them with advanced in-store and digital innovations.[11]
Overall, Walmart’s strong earnings report is a marked contrast with other retailers that have reported results this week, particularly those that don’t focus as heavily on essentials. Walmart’s shares are up just over 5% year-to-date, outperforming an about 1.5% gain in the broader consumer staples sector over the same period.[0]
0. “Walmart Earnings Expected to Rise as Consumers Spend More on Necessities” Investopedia, 17 May. 2023, https://www.investopedia.com/walmart-q1-fy2024-earnings-preview-7499334
1. “Walmart reports, Alibaba earnings, Applied Materials: 3 things to watch By Investing.com” Investing.com, 17 May. 2023, https://www.investing.com/news/stock-market-news/walmart-reports-alibaba-earnings-applied-materials-3-things-to-watch-3084966
2. “Walmart Lifts Profit Outlook But Stays Cautious on US Consumers” Yahoo Finance, 18 May. 2023, https://finance.yahoo.com/news/walmart-lifts-profit-outlook-stays-120451819.html
3. “Retail Earnings Preview: What To Expect From Target, TJX Companies And Walmart This Week – Target (NYSE:TGT)” Benzinga, 16 May. 2023, https://www.benzinga.com/news/earnings/23/05/32431804/retail-earnings-preview-what-to-expect-from-target-tjx-companies-and-walmart-this-week
4. “Retail Earnings Looming: What to Expect” Zacks Investment Research, 12 May. 2023, https://www.zacks.com/commentary/2094933/retail-earnings-looming-what-to-expect
5. “Inflation-weary shoppers flock to Walmart” CNN, 18 May. 2023, https://www.cnn.com/2023/05/18/investing/walmart-earnings-stock/index.html
6. “Walmart’s Up, but This Smaller Retail Stock Is Really Soaring Thursday” The Motley Fool, 18 May. 2023, https://www.fool.com/investing/2023/05/18/walmarts-up-but-this-smaller-retail-stock-is-reall/
7. “Walmart ups quarterly dividend on revenue and income uplift” Marketscreener.com, 18 May. 2023, https://www.marketscreener.com/quote/stock/WALMART-INC-4841/news/Walmart-ups-quarterly-dividend-on-revenue-and-income-uplift-43886530/
8. “Inflation-weary shoppers flock to Walmart” CBS Miami, 18 May. 2023, https://www.cbsnews.com/miami/news/inflation-weary-shoppers-flock-walmart/
9. “Walmart raises full-year guidance, as earnings beat on boost from grocery and online businesses” CNBC, 18 May. 2023, https://www.cnbc.com/2023/05/18/walmart-wmt-q1-2024.html
10. “Walmart gets Q1 boost from e-commerce” Winsight Grocery Business, 18 May. 2023, https://www.winsightgrocerybusiness.com/walmart/walmart-gets-q1-boost-e-commerce
11. “Factors to Note Before Walmart’s (WMT) Q1 Earnings Release” Zacks Investment Research, 15 May. 2023, https://www.zacks.com/stock/news/2095200/factors-to-note-before-walmarts-wmt-q1-earnings-release