Walmart’s CEO Predicts Profits Will Continue to Grow: What Does This Mean for Investors?
On Thursday, the discounter upped its full-year projection, relying on its low-price brand to attract supermarket customers and grow online spending.The big-box retailer outperformed Wall Street in terms of sales and profitability. Walmart’s US e-commerce sales increased by 24%.
Walmart now anticipates a 4% to 4.5% growth in full-year consolidated net sales. It expects adjusted earnings per share to range between $6.36 and $6.46 this year. This compares to its previous expectation of 3.5% consolidated net sales growth and an adjusted earnings per share increase of $6.10 to $6.20.During the quarter, Walmart witnessed “modest improvement” in sales of big-ticket and discretionary items like electronics and home goods, according to Chief Financial Officer John David Rainey in an interview with CNBC. Sales of these items have been down for more than a year as Americans spend more on basics such as food.
Earnings per share: $1.84 adjusted, compared to $1.71 projected.$161.63 billion in revenue versus $160.27 billion predicted
Walmart’s net income for the quarter increased by almost 33% to $7.89 billion, or $2.92 per share, from $5.15 billion, or $1.88 per share, the previous year. Customers visited Walmart’s stores and internet more frequently, and they spent more money when they did. Walmart U.S. had a 2.9% rise in transactions and a 3.4% increase in average ticket price.Walmart U.S.’s same-store sales increased 6.4% year on year in the second quarter, excluding gasoline. According to FactSet, this is more than the 4.1% gain projected by experts.Same-store sales at Sam’s Club increased 5.5%, excluding gasoline, in line with analyst estimates.
Walmart’s online sales in the United States increased as more customers purchased items from the company’s expanding third-party marketplace and placed more orders for store pickup and delivery.”It really demonstrates that Walmart’s value proposition is much more than just low prices or value.” Today, it’s all about convenience,” Rainey explained. “And so we’re leaning heavily into that, as well as really both aspects of this part of our business.”
Walmart has distinguished itself from competitors like as Target, who have battled with lower sales. Because it is the nation’s largest grocer, it is better insulated from shifting consumer tastes and reactions to economic concerns such as high inflation.Customers are increasingly purchasing food from Walmart’s private brands, which are normally less expensive. Private label sales increased 9% year on year in Walmart’s grocery category. These brands account for 20% of Walmart’s total US sales.
Shoppers may also be aiming to save money by cooking more meals at home rather than eating out. Walmart has witnessed “a little bit of a shift towards cooking from home,” according to Rainey. It saw an increase in sales of prepared meals and cooking gear such as blenders and mixers.Walmart has also achieved traction with new revenue streams, such as selling more adverts and encouraging more customers to join its membership programme, Walmart+. These higher margin industries are a big reason why CEO Doug McMillon expects profits to outpace revenues over the next five years