Walmart Posted Earnings That Were Out Of This World

Walmart Posted Earnings That Were Out Of This World
Paul Allison, CFA

6 months ago2 mins

What’s going on here?

US retail juggernaut Walmart blew past expectations on Thursday, with sales taking off last quarter.

What does this mean?

Big retailers Target and Home Depot reported some uneven results this week, and that meant all eyes were on fellow retailer Walmart’s update on Thursday morning. Expectations were already riding pretty high – after all, the Bentonville titan’s got a knack for scooping up customers from pricier stores into its budget-friendly food aisles. And the supersize firm didn’t disappoint: Walmart went right ahead and overshot folks’ hopeful predictions, with first-quarter sales growth of 7.4% in stores open a year or more. That’s pretty impressive, especially considering Target’s flat sales and Home Depot’s sales dropoff. Plus, Walmart’s e-commerce sales were up 27% – which could have the old “Walmart’s the new Amazon” chorus back in full force again.

Walmart same store sales

Why should I care?

Zooming in: Shrinking stock.

Whether a sign of the times or something more sinister, “shrink” – that’s retail speak for stealing – has become a gnawing issue for some retailers. Just ask Target. The firm’s bracing for retail crime to snip a hefty $500 million from its profit this year, throwing a wrench in its efforts to get margins back to pre-pandemic levels. Target executives reckon it’s an industry-wide problem, but it doesn’t seem to be rattling other retailers quite as much: after all, it got very little air time on Walmart’s post-earnings conference call.

The bigger picture: The bare necessities.

Walmart’s stock is closing in on an all-time high right now, thanks to the everyday bargains that have been flying off its shelves. See, while selling pricier merchandise has been a sweat-inducing endeavor lately, the basics have been raking in the cash. That’s given a lovely little boost to firms that aren’t in retail too, like Procter & Gamble and McDonald’s. But the tide may yet change: if consumers regain confidence and start to splurge, some popular defensive stocks just might take a beating.

Walmart stock
Source: Google Finance


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