{"id":10666,"date":"2023-05-18T20:31:17","date_gmt":"2023-05-19T00:31:17","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/walmart-stock-rises-earnings-stood-out-in-a-tough-spring-for-retail\/"},"modified":"2023-05-18T20:31:18","modified_gmt":"2023-05-19T00:31:18","slug":"walmart-stock-rises-earnings-stood-out-in-a-tough-spring-for-retail","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=10666","title":{"rendered":"Walmart Stock Rises. Earnings Stood Out in a Tough Spring for Retail."},"content":{"rendered":"
\n

\n Walmart
\n posted first-quarter adjusted earnings and revenue that beat Wall Street expectations, raising its outlook for the fiscal year\u2014a marked contrast with other retailers that have reported results this week, particularly those that don\u2019t focus as heavily on essentials. <\/p>\n

\n Walmart
\n (ticker: WMT) reported adjusted earnings of $1.47 a share on revenue of $152.3 billion. Analysts surveyed by FactSet were expecting adjusted profit of $1.32 a share on revenue of $148.9 billion.<\/p>\n

\n

U.S. same-store sales climbed 7.4%, ahead of analysts\u2019 estimates of 5.5%.<\/p>\n

\u201cWe had a strong quarter. Comp sales were strong globally with eCommerce up 26%,\u201d Chief Executive Doug McMillon said in the earnings release. \u201cWe leveraged expenses, expanded operating margin, and grew profit ahead of sales.\u201d<\/p>\n

The retailer also raised its financial forecasts for fiscal 2024. The company now expects adjusted earnings of between $6.10 to $6.20 a share, while analysts surveyed by FactSet had been expecting $6.14. Revenue for the year is now expected to increase about 3.5%. <\/p>\n

Guidance for the current quarter was below consensus. Walmart said it expects second-quarter earnings of between $1.63 and $1.68 a share. Analysts surveyed by FactSet were expecting earnings of $1.71.<\/p>\n

In early afternoon, the stock was up 0.6% at $150.56, though it rose as high as $154.29 in morning trading.<\/p>\n

The positive reaction is no surprise. Other stores have provided a more mixed picture of consumer demand, while Walmart\u2019s report and full-year outlook were unequivocally strong, punching through the high expectations Wall Street had before the numbers landed. <\/p>\n

Prior to Walmart\u2019s results, retail earnings season was off to a muted start.
\n Target
\n (TGT) delivered earnings that were better than expected, although the big-box company sounded a cautious note with its financial forecasts. And off-price retailer
\n TJX
\n Cos. (TJX) also delivered a downbeat second-quarter forecast. Both stocks zigzagged in response to the results. <\/p>\n

The focus of Target and TJX is more on discretionary products like clothes, a category that has taken a hit as inflation forces shoppers to spend more on essentials like food. Even
\n Home Depot
\n (HD) noted weakness in discretionary sales when it reported results Tuesday.<\/p>\n

By contrast, Walmart excels at selling essentials, which is how it earned its reputation as a more defensive retailing investment. That appears to be working out now, as consumers are still laser focused on value, given the high cost of living and people\u2019s continuing desire to spend on experiences such as travel that that were on hold during the pandemic.<\/p>\n

That said, the company hasn\u2019t been immune to shifting spending patterns. It was caught flat-footed last year when shoppers rapidly reduced their purchases of discretionary products like apparel and home goods in a turnabout that forced management to sharply lower its guidance.<\/p>\n

And Walmart sounded the alarm again in February. The company gave a weak forecast that overshadowed strong results, warning that its shoppers were feeling pinched. By contrast, Thursday\u2019s report was strong, leading the company to lift its outlook, to investors\u2019 relief. <\/p>\n

Walmart\u2019s results did demonstrate that it is seeing some of the broader trends affecting the industry. While grocery sales remained robust, lifting its same-stores sales, discretionary categories like apparel and home goods were lower.<\/p>\n

The company\u2019s big grocery business comes with slim margins\u2014gross margin did slip in the quarter\u2013and somewhat easing food prices could act as a small headwind later this year. That said, on its conference call management noted it\u2019s working with suppliers to lower food prices as quickly as possible \u201cto free up cash for customers to use for discretionary goods\u2026it\u2019s just taking longer in those categories than we want.\u201d<\/p>\n

\u201cWalmart\u2019s first-quarter performance suggests the company is confident in its momentum and that forward guidance is probably conservative,\u201d wrote Wells Fargo analyst Edward Kelly. \u201cThe list of high-quality names where we can realistically expect any earnings upside this year is small, but\u00a0Walmart makes the cut.\u201d<\/p>\n

In fact, management noted that it was attracting new customers, including valuable younger and higher-income consumers, drawn in by Walmart\u2019s grocery business. Those using its Walmart+ subscription services also tend to spend more than regular shoppers, it noted.<\/p>\n

The company\u2019s e-commerce business grew 26% in the quarter, while its global advertising business surged 30%, demonstrating the company\u2019s continuing evolution away from its core retail business toward faster growing, more profitable segments. <\/p>\n

\u201cWalmart\u00a0is undergoing a remarkable transformation, evolving dramatically beyond its roots as a traditional retailer into a multifaceted household services company,\u201d wrote Third Bridge analyst Nicholas Cauley.<\/p>\n

The picture also looked good on the international side, with double-digit sales growth in key markets like China and Mexico and India\u2019s FlipKart.<\/p>\n

\u201cThe\u00a0year\u00a0is\u00a0off\u00a0to\u00a0a\u00a0good\u00a0start,\u201d said Chief Financial Officer John David Rainey. The market seems to agree. <\/p>\n

Write to Teresa Rivas at teresa.rivas@barrons.com and Angela Palumbo at angela.palumbo@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Walmart posted first-quarter adjusted earnings and revenue that beat Wall Street expectations, raising its outlook for the fiscal year\u2014a marked contrast with other retailers that have reported results this week, particularly those that don\u2019t focus as heavily on essentials. Walmart (ticker: WMT) reported adjusted earnings of $1.47 a share on revenue of $152.3 billion. Analysts […]<\/p>\n","protected":false},"author":1,"featured_media":10667,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-10666","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nWalmart Stock Rises. 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