Walmart $Wal-Mart(WMT)$ just released its report yesterday, let me highlights some key points here.
Walmart, the global retail giant, has released its financial report for the fourth quarter of the 2023 fiscal year ending on January 31st. According to the data, Walmart's Q4 total revenue was $164.05 billion, a year-on-year increase of 7.3%, significantly higher than Wall Street's expected $159.72 billion. Under the Non-GAAP criteria, Walmart's Q4 adjusted earnings per share were $1.71, exceeding Wall Street's expected $1.51 and last year's $1.53. In addition, Walmart's Q4 net profit was $6.28 billion (GAAP earnings per share were $2.32), far higher than the $3.56 billion in the same period last year (GAAP earnings per share were $1.28).
Walmart's same-store sales in the United States increased by 8.3% year-on-year, excluding fuel. This key industry indicator includes sales from stores and shopping clubs under Walmart's name that have been open for at least one year. The e-commerce sales of Walmart's U.S. market increased by 17% year-on-year, and the same-store sales of Sam's Club, a subsidiary of Walmart, increased by 12.2% year-on-year, excluding fuel sales data. Due to the high inflation rate in the United States, investors and economists are eager to see clues about the health of American consumers. Therefore, Walmart's financial report, especially its performance outlook, is receiving global market attention.
Food and grocery prices in the United States are still high, which has led to a significant reduction in the number of non-essential consumer purchases. Consumers are still under pressure, and their balance sheets are becoming thinner, with their savings rates declining relative to previous periods. Therefore, we remain quite cautious about the consumption prospects for the remainder of this year.
Highlights :
* Walmart's strong financial performance in Q4 of 2023 suggests that the company is benefiting from the ongoing shift to e-commerce and increasing demand for household goods during the pandemic.
* The high inflation rate in the United States is putting pressure on consumers' purchasing power, which could impact their spending habits and ultimately affect Walmart's future revenue growth.
* As Walmart's financial report is considered a barometer of the health of the US consumer, its positive results may indicate a strong rebound in consumer confidence and spending after the pandemic-related slowdown.
Overall, Walmart has announced better-than-expected performance, especially during the holiday shopping season when consumers demonstrated significant purchasing power. Walmart reports that its supermarkets have attracted price-conscious shoppers who are concerned about rising prices and tend to buy more food, gifts, and home goods at lower prices.
However, Walmart's forecasts did not satisfy Wall Street. The retail giant predicts that its same-store sales in the US will increase by 2% to 2.5% (excluding fuel) in the next fiscal year (FY2024). The company also expects adjusted earnings per share to be between $5.90 and $6.05 (excluding fuel). However, Wall Street analysts have generally expected an upward trend of 3.8%, to $6.53. Walmart's projected adjusted earnings per share for the first quarter of FY2024 are $1.25 to $1.30, which is also lower than analysts' expectations of $1.37.
Additionally, the company anticipates that its same-store sales in the US (excluding fuel) will increase by 2% to 2.5% over the next fiscal year. According to data from StreetAccount, this is lower than Wall Street analysts' expectations of a 3% increase. If Walmart's actual earnings per share for FY2024 are in line with the company's forecast, this could mark Walmart's second consecutive year of declining annual profits. Walmart's adjusted earnings per share for FY2023 fell to $6.29, marking the first annual decline in profitability in six years (FY2022 was $6.46).
This outlook suggests that Walmart will slowly rebound from last year's decision-making mistakes, when Walmart misjudged the trend of consumer demand shifting from general goods such as clothing and home goods to essential items, mainly due to inflation suppressing US consumer purchasing power. However, since then, the retail giant has adjusted its strategies and overall, FY2023 still benefits from strong grocery sales and the trend of high-income shoppers seeking cheaper goods.
Things to take note:
* Walmart's better-than-expected performance during the holiday season could indicate that the company's price-conscious approach has resonated with consumers.
* Walmart's lower-than-expected forecasts could cause investor concern, which may impact the company's stock price.
* If Walmart's actual earnings per share for FY2024 are in line with the company's forecast, this could mark Walmart's second consecutive year of declining annual profits, which could further impact investor sentiment.
* Walmart's slow rebound from last year's decision-making mistakes and adjustments to its strategies could impact the company's long-term growth prospects.
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