Walmart Reports Strong Holiday Shopping Season But Cautious Outlook for 2021
By Walmart had a strong holiday shopping season, with customers turning to the retail giant for groceries and other essentials, but the company is preparing for a more challenging year ahead.[0] Walmart reported a total revenue of $164 billion for its fiscal fourth quarter, up 7.3%, or 7.9% in constant currency.[1] The company reported an 11.76% increase in adjusted earnings to $1.71 per share on 7.3% revenue growth.
Walmart’s US net sales increased 8.0%, Walmart International rose 2.1%, and Sam's club jumped 11.3%. Revenue for the company's international operations grew 2.1%, reaching $27.6 billion, with Mexico and Central America, China, and Canada contributing to the increase.[2] Walmart’s US same-store sales, excluding fuel sales, rose 8.3%, while Sam's Club comparable sales rose 12.2%. The annual increase in Walmart's online sales was 17%.[2] Worldwide, advertising experienced an increase of 20%, with Walmart Connect in the US showing a growth of 41%.[3]
However, Walmart CFO John Rainey told CNBC that the consumer is still very pressured.[4] “And if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods. And so that's why we take a pretty cautious outlook on the rest of the year.”[4]
Walmart is now expecting first-quarter adjusted earnings per share of $1.25 to $1.30, below the FactSet consensus of $1.37.[2] The company anticipates adjusted per-share earnings for the entire year to be in the range of $5.90 to $6.05, which is under the $6.53 FactSet prediction.[5]
Doug McMillon, the CEO of Walmart, has stated that he intends to help reduce inflationary prices, and will not take part in a potential recession.[6] He also said Walmart is gaining share across income cohorts, including at the higher end, which made up nearly half of the gains in the US during the quarter. He added that the company is capturing a greater share of wallet at Sam’s Club in the US with both mid and higher income shoppers.[7]
As 2021 begins, Walmart is exercising caution, providing more prudent guidance for the fiscal year than what analysts had predicted.[6]
0. “Walmart Options Fly Off the Shelves After Earnings” Schaeffers Research, 21 Feb. 2023, https://www.schaeffersresearch.com/content/news/2023/02/21/walmart-options-fly-off-the-shelves-after-earnings
1. “Flipkart’s positive contribution margin expanding; Walmart international operating cost hit by PhonePe hiv” Economic Times, 21 Feb. 2023, https://economictimes.indiatimes.com/tech/technology/walmart-cfo-says-flipkarts-rising-share-in-parents-revenue-growth-profit-is-inspiring/articleshow/98129926.cms
2. “Walmart Stock Falls On Weak Guidance, May Hold ‘Trade-Down' Upside | Investor's Business Daily” Investor's Business Daily, 21 Feb. 2023, https://www.investors.com/news/walmart-stock-falls-on-weak-guidance-but-may-hold-trade-down-upside/
3. “I Like Walmart and Its Quarter, But Do I Like the Stock Here?” RealMoney, 21 Feb. 2023, https://realmoney.thestreet.com/investing/i-like-walmart-and-its-quarter-but-do-i-like-the-stock-here–16116485
4. “Consumer stocks fall after Walmart warns shoppers are pulling back on spending” Seeking Alpha, 21 Feb. 2023, https://seekingalpha.com/news/3938472-consumer-stocks-fall-after-walmart-warns-shoppers-are-pulling-back-on-spending
5. “Walmart’s stock reverses early losses as analysts welcome market-share growth in grocery” MarketWatch, 21 Feb. 2023, https://www.marketwatch.com/story/walmart-stock-slides-4-5-premarket-as-soft-guidance-offsets-earnings-beat-851b3e92
6. “Walmart CEO Doug McMillon Vows to Keep Private Labels Priced Low to Fight Inflation” NBC New York, 22 Feb. 2023, https://www.nbcnewyork.com/news/business/money-report/walmart-ceo-doug-mcmillon-vows-to-keep-private-labels-priced-low-to-fight-inflation/4116293/
7. “Walmart economic outlook uncertain as consumers remain cautious on spending” Global News, 21 Feb. 2023, https://globalnews.ca/news/9500325/walmart-earnings-economy-inflation
