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Walmart increases market share in grocery sales and delivers a 7.3% quarterly revenue growth

Autor: Financial Market
Timp de citit: 2 minute

Although the results for the last quarter and for the entire fiscal year 2023 were slightly above expectations, the company’s outlook (guidance) for this year was issued below analysts’ consensus.

Quarterly revenue came in at $164 billion, up 7.3% year-over-year while net profit was $6.28 billion, or $2.32, both up 76%, respectively 81% compared to the year before.

Both the operational profit and the margin contracted compared to the previous year due to the increase in costs.

At the annual level, the total revenues exceeded 600 billion dollars (+6.7%), while the net profit decreased by almost 15%.

Fourth-quarter highlights
• Walmart delivered revenue growth globally with strength in stores and eCommerce. Total revenue was $164.0 billion, up 7.3%, or 7.9% in constant currency
• Walmart U.S. comp sales grew 8.3% and 13.9% on a two-year stack. eCommerce growth was 17% and 18% on a two-year stack. Continued to gain market share in grocery.
• Sam’s Club comp sales increased 12.2%, and 22.6% on a two-year stack. Membership income increased 7.1% with member count at an all-time high.
• Walmart International net sales were $27.6 billion, an increase of 2.1% and negatively affected by $0.9 billion from currency fluctuations, while constant currency sales were $28.5 billion, an increase of 5.5%.
• Global advertising business grew over 20%, led by 41% growth at Walmart Connect in the U.S.
• Consolidated gross profit rate declined 83 basis points, primarily due to markdowns and mix of sales.
• Consolidated operating expenses as a percentage of net sales decreased 44 basis points primarily due to strong sales growth and lower Covid-related costs, partially offset by reorganization and restructuring charges incurred in the International segment.
• Consolidated operating income was $5.6 billion, a decrease of 5.5%
• Adjusted operating income was $6.4 billion, an increase of 6.9%. GAAP EPS of $2.32; Adjusted EPS of $1.71 excludes the effects of $1.16 from net gains on equity and other investments and $0.55 from charges related to reorganization and restructuring.

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Forecasts were particularly disappointing – in Q1 2023 Walmart sees earnings per share between $1.25 and $1.30, while sales are expected to grow 4.5-5%. Analysts had expected earnings of $1.36 per share.

In addition, for the full year 2023, the company forecasts earnings per share in the range of $5.90-$6.05, well below the consensus of $6.50.

Estimated full-year sales growth will be around 2.5-3%. Goldman Sachs pointed out that it was the disappointingly weak forecasts that weighed on investor sentiment, not offset by strong fourth-quarter results.