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May 22, 2023 : Walmart Inc. has released its first-quarter 2023 earnings report, showing positive results despite challenges faced by the retail industry. The world’s largest retailer reported total revenue of $141.6 billion, a 2.4% increase. However, the company experienced a negative impact of $5 billion due to divestitures. Walmart raised its full-year guidance as earnings exceeded expectations, partly driven by growth in the grocery business.
Walmart’s e-commerce sector also contributed to its positive financial performance. In the first quarter, U.S. comp store sales for the e-commerce division grew 3.0%, and on a two-year stack, it saw a significant increase of 9.0%. Walmart’s U.S. eCommerce sales grew 1% or 38% on a two-year stack.
Sam’s Club, Walmart’s membership-based retail warehouse club, reported a comp sales increase of 10.2% and 17.4% on a two-year stack. Membership income also saw a growth of 10.5%, with the highest quarterly member sign-up on record for Sam’s Club in the U.S. However, Walmart International experienced a decrease in net sales, with a decline of $3.5 billion or 13.0%, primarily due to divestitures.
The company’s consolidated operating income for the quarter was $5.3 billion, a decrease of 23.0%, which was negatively affected by $0.3 billion from divestitures. Walmart reported GAAP earnings per share (EPS) of $0.74 and adjusted EPS of $1.30.
Doug McMillon, President and CEO of Walmart Inc., commented on the strong performance of the company’s businesses during the quarter, despite unexpected bottom-line results. McMillon noted that higher inflation levels in the U.S., particularly in food and fuel, created more pressure on margin mix and operating costs than anticipated. However, Walmart is adjusting its strategies to balance the value offered to customers with the need for profit growth.
While Walmart achieved strong top-line results, the bottom line fell below expectations due to three key factors negatively affecting operating income in both Walmart and Sam’s Club. McMillon stated that each of these factors accounted for approximately one-third of the overall profit shortfall.
In terms of net sales, Walmart U.S. reported a 4% increase to $96.9 billion in the first quarter of 2023 compared to the same period in 2022. Walmart International’s net sales decreased by 13% to $23.8 billion, down from $27.3 billion in the first quarter of the previous year. Sam’s Club, on the other hand, saw a net sales increase of 17.5% to $19.6 billion, up from $16.7 billion in the previous year.
The company’s updated guidance reflects expectations of stable consumer behaviour in the U.S., higher supply chain costs, persistent inflation pressure, and a variety of product and format offerings globally. Walmart expects consolidated net sales to increase approximately 4% in constant currency, with a 4.5% to 5.5% increase, excluding divestitures. The revised forecast also indicates an expected 3.5% increase in net sales for the year, up from the previous range of 2.5% to 3%. Adjusted EPS for the year is projected to range from $6.10 to $6.20, surpassing the prior forecast range of $5.90 to $6.05. Analysts had predicted a 3.81% increase in sales and an EPS of $3.14 year over year. The effective tax rate is expected to remain unchanged at 25% to 26%. EPS is predicted to either decrease by 1% or remain unchanged
