Walmart Q4 sales soar, but earnings miss; raising wages for 425,000 workers

Walmart Inc. reported fourth-quarter earnings that fell short of expectations amid COVID-related costs and ongoing investments in e-commerce and cautioned that it expects sales, which have boomed amid the pandemic, to be moderate this year.

The retail giant also announced it will raise the pay of  425,000 U.S. workers in frontline digital and stocking workgroups roles with starting rates moving to $13 – $19 per hour, based on the store’s location and market, starting March 13. (Average will be above $15 per hour, starting March 13. The minimum starting wage for workers will remain at $11 an hour. 

"This is an investment in our people, at the same time we make new investments in our supply chain, automation and technology," stated John Furner, president and CEO, Walmart U.S., in a letter to associates. "It follows other actions we took last year, including special COVID-19 bonuses, raising pay for 165,000 key leadership roles, and restructuring to a team-based model of working in our stores."

Walmart posted a net loss of $2.09 billion, or $0.74 per share, for the quarter ended Jan, 31, compared to earnings of $4.14 billion, or $1.45 per share, in the year-ago period. The retailer said a loss on its U.K. and Japanese operations reduced earnings by $2.66 per share,

Adjusted EPS of $1.39 missed analysts’ estimates of $1.51. The pandemic continued to take a toll on costs, with the chain spending $1.1 billion on COVID-related costs in the quarter.

Total revenue rose 7.3% to $152.1 billion, beating the Street estimate of $148.51 billion. Walmart U.S. same-store sales rose 8.6%, with strength across most key categories and ahead of the 5.6% analysts had predicted. E-commerce U.S. sales rose 69%. 

Sam’s Club U.S. same-store sales rose 10.8%. E-commerce sales grew 42% and membership increased 12.9%, the strongest growth in six years.

For the full year, Walmart's total revenue rose 6.7% to $559.2 billion.  Walmart U.S. comp sales increased 8.6%.  Sam's Club comp sales rose 11.8%. 

Walmart’s capital expenditures for its new fiscal year are expected to be nearly $14 billion and will include continued investments in building supply chain capacity, automation and ways to improve the customer experience. (The amount is higher than Walmart's typical rate of $10 billion to $11 billion, CFO Brett Biggs said at the company's investor day presentation.) These improvements will likely make online sales more efficient and profitable.

“Change in retail accelerated in 2020,” stated Walmart president and CEO Doug McMillon. “The capabilities we’ve built in previous years put us ahead, and we’re going to stay ahead. This is a time to be even more aggressive because of the opportunity we see in front of us. The strategy, team and capabilities are in place. We have momentum with customers, and our financial position is strong.”

The company is raising its dividend by a penny to 55 cents per share. It also approved a $20 billion stock buyback program.

Walmart expects fiscal 2022 comp sales growth in the low-single digits excluding fuel at Walmart U.S. It also expects consolidated net sales growth to be up in the low single-digits.

The company is guiding for EPS to decline “slightly,” though it's expected to be flat-to-up slightly excluding divestitures. The Street consensus is for Walmart U.S. comp sales decline of 0.1% and EPS of $5.75, suggesting 3% growth.

“Assumptions in the guidance are dependent upon the duration and intensity of the COVID-19 health crisis globally, timing and effectiveness of global vaccines, the scale and duration of economic stimulus, employment trends and consumer confidence,” Walmart noted.