Dow Jones retail giant Walmart comfortably topped holiday-quarter earnings and sales targets Tuesday morning. The guidance was less comfortable, however, and Walmart stock edged up slightly Tuesday after falling sharply lower premarket.
Walmart's adjusted earnings jumped 11.76% to $1.71 per share on 7.3% revenue growth to $164 billion. Analysts expected profit to edge down slightly to $1.52 per share as sales rose 4.5% to $159 billion, according to FactSet. The adjusted earnings excluded $1.16 in net gains on equity and other investments, as well as a 55-cent reorganization and restructuring charge.
The results mark two quarters of accelerating earnings gains, while Walmart averaged about 5.9% sales growth over the past year.
The company's same-store sales excluding fuel in the U.S. rose 8.3% while Sam's Club comparable sales rose 12.2%. Walmart's online sales rose 17% over the year. The company's international revenue rose 2.1% to $27.6 billion, led by increases in Mexico and Central America, China and Canada.
Outlook
For its fiscal 2024 Q1 results, Walmart's release guided net sales to increase 4.5% to 5%. The retailer sees adjusted earnings to range between $1.25 and $1.30 per share, compared to $1.30 reported in Q1 FY22. For the full year, Walmart projects adjusted earnings between $5.90 per share and $6.05 per share, down from $6.29 per share reported for fiscal 2023. The company projects 2.5% to 3% net sales growth. Walmart's same-store U.S. sales, excluding fuel sales, are seen rising 2% to 2.5% for the fiscal year. And it's Sam's Club comparable sales are expected to increase 5%.
Still, Landon Luxembourg, analyst at research firm Third Bridge, believes Walmart could see a boost from consumers watching their wallets.
"During the pandemic, retailers like Target benefited from a trade-up consumer mentality," Luxembourg wrote in a post-earnings note. "Now, as shoppers become increasingly cost-conscious and trade down, Walmart is in just the right position to benefit."
Physical stores are key for the retailer, a fact underscored by its tech-unit closures announced early this month. Brick-and-mortar conversion rates are much higher than its online options, according to Luxembourg. However, after raising its hourly wages, Walmart will need to overcome pricing and supply chain challenges to maintain its value proposition, he wrote.
Walmart Stock
WMT stock initially fell more than 4% premarket Tuesday, then pared losses to climb 0.59% on the day. MarketSmith charts show Walmart shares in a cup with handle base with a 154.74 buy point.
WMT stock is up 3.2% over the past month and 3.89% year-to-date.
You can follow Harrison Miller for more news and stock updates on Twitter @IBD_Harrison.
