Chief Financial Officer John David Rainey said in an interview with CNBC that customers remain cautious about their purchases. Although they put fewer items in their shopping carts, they said they shopped more often. Selling electronics, televisions, computers and some other big-ticket items has become more difficult, Rainey added.
But he said Walmart's sales have remained strong even after the holiday rush.
Below is a comparison of what Walmart reported and Wall Street's expectations, based on analyst research by LSEG (formerly Refinitiv).
- Earnings per share: $1.80 adjusted, $1.65 expected
- Revenue: $173.39 billion vs. $170.71 billion expected.
Walmart's net income for the three months ended Jan. 31 fell to $5.49 billion, or $2.03 per share, from $6.28 billion, or $2.32 per share, a year earlier.
Sales increased from $164.05 billion in the same period last year.
Walmart said it expects consolidated net sales to increase 4% to 5% in the first quarter. The company also expects adjusted earnings to be between $1.48 and $1.56 per share on a pre-split basis.
The company expects consolidated net sales to increase 3% to 4% in fiscal 2025. Walmart expects adjusted earnings to be between $6.70 and $7.12 per share on a pre-split basis.
Walmart stock closed 3% higher on Tuesday after the company shared its results, outlook and acquisition news. Walmart stock has risen more than 11% since the beginning of the year, outpacing the S&P 500 index, which has risen about 4% over the same period.
Walmart has weathered high inflation better than many other retailers. The company is leveraging its reputation for value to attract families of different income levels and explore new ways to make money, including selling advertising, expanding its third-party marketplace, and offering a subscription-based program called Walmart+. I've been leaning towards it.
Comparable sales, an industry metric also known as same-store sales, increased 4% at Walmart US. At Sam's Club, comparative sales, including fuel, increased by 1.9%.
Global e-commerce sales increased 23% year-on-year, totaling more than $100 billion. In the U.S., e-commerce grew 17% as shoppers used curbside pickup to have their orders delivered to their homes.
Customer transactions in the United States increased 4.3% year over year. However, the average ticket, or amount paid by customers, decreased slightly.
Prices have fallen in some categories. Walmart's private brands tend to be cheaper and are popular in the United States and other parts of the world.
Chief Executive Officer Doug McMillon said in an earnings call Tuesday that general merchandise prices, including clothing, are lower than they were a year ago, and for some items are lower than they were two years ago. . In groceries, some items like apples, eggs, and deli snacks are cheaper, while other items like asparagus and blackberries are more expensive.
Prices for dry groceries, paper products, and cleaning supplies increased by mid-single digits compared to last year and by low 10 percent compared to two years ago.
Walmart also withdrew its deflation forecast. McMillon said during the company's third-quarter earnings call in November that the company could soon face a deflationary environment in which prices not only stabilize but also fall. He said these lower prices could help customers pay for more discretionary items.
But on Tuesday, Rainey told CNBC that deflation was now less likely. “The overall possibility is [of deflation] “There are still some left, but prices are more stable than they were three months ago,” he said.
What is one reason for Walmart's increased revenue? The company sells more than just cereal, socks and shampoo.
Walmart is moving into a more profitable business, and its new model is a key part of the company's future. For example, a retailer makes money by packing and shipping online orders for third-party sellers who are part of his marketplace. The company operated a delivery business that delivered products from major companies such as Home Depot and local businesses such as bakeries.
Advertising sales have also increased, with year-over-year gains of approximately 33% globally and 22% in the United States.
Rainey told CNBC that the Vizio acquisition is a “catalyst” for “a high-margin, fast-growing part of our business.” By using the TV's operating system, Walmart can not only display ads, but also have better data to track how customers engage with ads and whether ads lead to purchases. became.
The company also increased efficiency by adding automation to distribution centers that restock store shelves and fulfillment centers that handle online orders.
At last year's investor day, Walmart talked about plans to grow profits faster than sales over the next five years.
Rainey told investors on Tuesday's earnings call that Walmart expects sales to grow by an average of more than 5% and operating profit to grow by an average of more than 8% on an annual basis.
Walmart's e-commerce business is not yet profitable, but Rainey said it is getting closer to profitability. He said fulfillment costs have fallen 20% over the past year as the company unloads more packages on each delivery route and sells related services such as online advertising.
Customers are increasingly shopping on Walmart's website and app, which is helping the company create denser delivery routes. He said weekly active e-commerce customers have increased 17% over the past year.
While many other companies announced cost cuts, Walmart did the opposite. In late January, the company announced it would open or expand more than 150 stores in the United States over the next five years. This comes in addition to an aggressive plan to upgrade more than 1,400 existing Walmart stores with a more contemporary look.
Mr. Rainey told investors on an earnings call that stores with the innovative design had increased sales within their four walls and increased sales in the surrounding markets. He said the renovated stores provide more room for online pickup and delivery orders and improve Walmart's reputation with shoppers.
In addition to investing in these stores, Walmart also announced that it will raise salaries for store managers to an average of $128,000 per year and make them eligible for bonuses of up to 200% of their base pay.
The company also announced a 3-for-1 stock split in late January, with the stock hovering near all-time highs.
Walmart announced Tuesday that it will also reward shareholders. The company has increased its dividend by 9% this year, the largest increase in more than a decade.
