^{Source: Predictions based on analysts’ consensus from Visible Alpha}

Walmart (WMT) Financial Results: Analysis

Walmart Inc. (WMT) reported mixed results for Q1 FY 2023. The company’s adjusted earnings per share (EPS) missed consensus estimates, down 23.1% year over year (YOY). Walmart said that inflation, especially in food and fuel, created more pressure on its operating costs than expected, leading to unexpected results for its bottom line. Walmart’s revenue came in above analyst forecasts, rising 2.4% YOY. Comparable store sales growth for the company’s U.S.-based stores and clubs also beat analyst estimates.

The company’s shares fell more than 7% in pre-market trading. Over the past year, Walmart’s shares have provided a total return of 8.3%, above the S&P 500’s total return of -3.7%.

WMT U.S. Comparable Sales Growth

Walmart’s U.S. comparable sales, excluding fuel sales, grew 4.0% YOY, marking a deceleration from the final quarter of FY 2022 as well as the year-ago quarter. The metric encompasses revenue generated by Walmart’s U.S. stores and clubs that have been open during the previous 12 months. It includes sales from the company’s remodels, relocations, expansions, and conversions, as well as e-commerce sales.

Comparable sales growth gauges a company’s ability to generate additional revenue from established stores. If the bulk of a company’s sales are being generated by established stores as opposed to new ones, this is a good sign that the company’s products have not yet saturated the local market.

WMT Outlook

Walmart provided guidance for full-year FY 2023. The company expects its consolidated net sales to increase about 4% in constant currency. The company forecasts that EPS will decrease about 1% in constant currency. Walmart expects comparable sales (excluding fuel) for its U.S.-based stores to grow 3.5%. These forecasts are on a non-GAAP basis. Walmart said that its forecasts assume relative stability in the U.S. consumer but higher supply chain costs and continued inflation pressure.

WMT Earnings Call Recap

In an earnings call after results were announced, Walmart management said that the company’s customers appeared to be feeling the effects of inflation to a greater extent than anticipated. Management said that higher prices for grocery items caused consumers to rein in spending in other categories as they focused food purchases.

Walmart’s next earnings report (for Q2 FY 2023) is expected to be released on Aug. 16, 2022.