Walmart blows past Q1 estimates; expanding price cuts amid inflation
Walmart is relying on price cuts to stand out from its competitors and gain market share as inflation drives up prices on a wide range of goods and the pandemic eases its grip.
The retail giant had about 30% more discounts in its stores during the first quarter than in the year-ago period, Walmart U.S. CEO John Furner told analysts on the chain's earnings call after it reported first-quarter earnings and sales that easily topped Wall Street expectations amid strong grocery and e-commerce sales.
"Over the last 12 months, we saw our price gaps improve versus the market and our merchants are working hard to ensure that that will continue,” Furner said.
Furner also said during the call that the year ahead might be different than the previous one in that "value could be more important than convenience" as shoppers worry less about their safety and resume shopping different stores to find the best prices.
Walmart's net income totaled $2.73 billion, or $0.97 per share, in the quarter ended April 30, compared with $3.99 billion, or $1.40 per share, in the year-ago period. Adjusted earnings per share of $1.69 topped analysts’ estimates of $1.21.
Revenue rose to $138.31 billion from $134.62 billion last year, beating expectations of $132.16 billion. Walmart said that sales at its U.S. stores division increased 5% to $93.1 billion, while operating profit surged 26.8% to $5.4 billion. Traffic to stores declined 3.2%, while transaction sizes increased 9.5%,
Walmart U.S. comp sales increased 6%, with market share in grocery, and up 16% on a two-year stack. Digital sales in the U.S. rose 37%.
Walmart’s international’s net sales fell 8.3% to $27.3 billion, partially due to the company divesting parts of its global business.
Consolidated operating income was $6.9 billion, an increase of 32.3%, with strength across the company.
"Every segment performed well, and we're encouraged by traffic and grocery market share trend,” said Doug McMillon, president and CEO, in a statement. “Our optimism is higher than it was at the beginning of the year. In the U.S., customers clearly want to get out and shop. We have a strong position as our store environment improves and e-commerce continues to grow.”
Walmart's Sam's Club division stood out during the quarter with comparable sales up 7.2% and membership income up 12.7%. Total sales increased 10.1% to $16.7 billion. Most significant, the total member count for Sam's reached an all-time high during the quarter.
The retailer raised its outlook for the fiscal year. It expects earnings per share and Walmart U.S.’s operating income to increase in the high single-digits. It reiterated its guidance that Walmart U.S. and Sam’s Club same-store sales will grow in the low single-digits, excluding fuel and tobacco.