walmart earnings

Walmart stock (NYSE: WMT) stock is trading higher in US premarket price action today after it reported better than expected earnings for the fiscal third quarter of 2023.

Walmart reported revenues of $152.81 billion in the quarter, which was up 8.7% YoY and well ahead of the $147.75 billion that analysts were expecting. The retail giant reported an 8.2% YoY growth in comp sales in the US while its e-commerce sales increased 16% over the period. Walmart said that it continues to increase its market share in grocery.

Sales at Sam’s Club increased 10% YoY while the members rose 8% to a new record high. Walmart’s international sales also increased to $25.3 billion which was $1.7 billion higher than the corresponding quarter last year. The segment’s revenues increased despite a $1.5 billion hit from adverse currency movements.

Advertising business was another bright spot for Walmart and sales increased by 30% which it said was led by 40% growth in Walmart Connect in the US and the strong performance of Flipkart ads.

Walmart acquired Flipkart in 2018 for $16 billion as the world’s largest retail company bet on one of the fastest-growing e-commerce markets. Flipkart and Amazon have mostly dominated the Indian e-commerce market. However, the competition has intensified in the Indian e-commerce market.

Flipkart has now dialed back on acquisitions and also slowed the pace of hiring. That said, India is the world’s fastest-growing major economy, and several funds are bullish on Indian stocks especially given the pessimism toward China. We have a guide on how you can buy stocks in India.

Walmart Stock Rises as Earnings Beat Estimates

Walmart reported an adjusted EPS of $1.50 in the quarter which was ahead of the $1.32 that analysts were expecting. However, it posted a net loss of $1.8 billion due to an opioid settlement.

It however said, that the company “strongly disputes the allegations in these matters, and this settlement framework does not include any admission of liability.”

Walmart also talked about the inflationary pressures taking a toll on consumer spending. Its CFO John David Rainey said, “People have less discretionary income or less disposable income to spend on things — and so they’re looking for value.” He added that “pocketbooks are stretched.”

However, higher inflation has helped Walmart increase its market share as around three-fourths of market share gains that it saw in the foods business came from households with earnings of over $100,000 a year.

Walmart also managed to reduce its inventory levels. While the inventory levels are still 13% higher YoY, they are 25% lower than what they were at the end of the fiscal second quarter.

Walmart Raised Its Guidance After Strong Quarter

WMT also raised its full-year projections after strong earnings in the fiscal third quarter. It expects a consolidated sales growth of 5.5% for the fiscal year. It forecasted sales growth of 3% in the US, which is below the 3.5% growth that analysts were expecting.

While Walmart said that holidays are “off to a pretty solid start,” it added, “consumers are using discretion in terms of what they’re buying.”

Notably, Amazon also expects sales to rise between 2-8% YoY in the December quarter, which was lower than what analysts were expecting.

Amazon is Reportedly Looking at Mass Layoffs

Amazon stock slumped after its Q3 2022 earnings release. Several analysts lowered their target price on the stock but overall, Wall Street is overwhelmingly bullish on the stock. We have a guide on how beginners can buy Amazon stock.

Amid slowing sales growth, Amazon is reportedly looking to lay off as many as 10,000 employees, or 3% of its corporate workforce, as early as this week. Amazon’s founder Jeff Bezos separately warned of a recession.

That said, strong earnings from Walmart and a reasonably good set of numbers from Home Depot should help allay recession fears. There are a flurry of retail earnings and economic data releases this week which would help markets gauge the strength of US consumer spending amid high inflation.

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