{"id":1406503,"date":"2023-08-17T13:02:51","date_gmt":"2023-08-17T17:02:51","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1406503"},"modified":"2023-08-17T13:02:51","modified_gmt":"2023-08-17T17:02:51","slug":"walmart-erases-gains-despite-beating-and-raising-guidance-after-cautious-commentary-on-earnings-call","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/walmart-erases-gains-despite-beating-and-raising-guidance-after-cautious-commentary-on-earnings-call\/1406503\/","title":{"rendered":"Walmart Erases Gains Despite Beating And Raising Guidance, After Cautious Commentary On Earnings Call"},"content":{"rendered":"

Walmart Erases Gains Despite Beating And Raising Guidance, After Cautious Commentary On Earnings Call<\/span><\/p>\n

\n

Retail giant Walmart, traditionally viewed as the curtain call to earnings season, reported results that beat on the top and bottom line and also raised its annual profit forecast for the second straight quarter after scoring new sales gains with bargain-hunting US shoppers. A quick look at the company’s Q2 results:<\/p>\n

Revenue $161.63 billion, +5.7% y\/y, beating <\/strong><\/em>estimate of $159.72 billion
\n\tAdjusted EPS $1.84, beating <\/strong><\/em>estimates of $1.70
\n\tTotal US comparable sales ex-gas +6.3%, beating <\/strong><\/em>estimates of +4.04%
\n\tWalmart-only US stores comparable sales ex-gas +6.4%, beating <\/strong><\/em>estimates of +4.29%
\n\t\tSam’s Club US comparable sales ex-gas +5.5%, in line <\/strong><\/em>with estimate +5.58%<\/p>\n

\tChange in US E-Commerce sales +24%<\/p>\n

<\/a><\/p>\n

Comp sales of 6.4%, while below last year’s 6.5% and down from 7.4% in Q1, beat estimates of a 4% increase with “strength in grocery and health & wellness, offset by softness in general merchandise.” The company reported that sales growth included increases in both store and digital transactions, and was boosted by “strong market share gains in grocery.”<\/p>\n

<\/a><\/p>\n

Some other highlights from Q1: <\/em><\/p>\n

WMT’s Gross profit rate rose +40 bps <\/strong><\/p>\n

The company said that “the lapping of last year’s elevated markdowns and supply chain costs benefited margins.” <\/strong>Prices were “managed” to reflect elevated levels of cost inflation (this is what socialist economists call “greedflation”) and was partly offset by unfavorable product mix shifts as grocery and health & wellness increased nearly 240 bps as a portion of sales mix, while general merchandise sales declined.<\/p>\n

Operating expenses as a percentage of net sales +28 bps<\/strong><\/p>\n

Reflects higher variable pay relative to last year as well as technology investments
\n\tStore remodel costs increased as we continue rollout of an elevated store experience<\/p>\n

Operating income $6.1 billion, +7.6%<\/strong><\/p>\n

Reflects increased gross margins and Walmart+membership income, partially offset by expense deleverage<\/p>\n

Inventory -7.6% <\/strong><\/p>\n

In-stock levels and the composition of inventory mix has improved
\n\tMaintaining discipline in buying general merchandise due to macro uncertainty<\/p>\n

<\/a><\/p>\n

According to CFO John David Rainey, food revenue continued to rise strongly and Walmart\u2019s general merchandise business was stronger than the company expected at the beginning of the second quarter. As discussed previously, the retailer is also still benefiting from “stepped-up demand among higher-income customers.” <\/strong>Translation: Bidenomics is doing so well, more and more higher-income customers have to shot at Walmart.<\/strong><\/p>\n

\u201cWe\u2019re gaining share and our value proposition continues to resonate, both for value and convenience,\u201d Rainey said in an interviewy. \u201cThe consumer is still spending, but they\u2019re being discerning in their spending.\u201d<\/strong><\/p>\n

It was the strong consumer outlook that helped boost Walmart’s guidance:<\/p>\n

For Q2, WMT sees:<\/strong><\/p>\n

\tnet sales +3.0%
\n\t\toperating income 1.0%
\n\t\tadjusted EPS of $1.45 to $1.50, just above the estimate $1.49;<\/p>\n

\tFor the the full year, WMT sees:<\/strong>
\n\tNet sales up 4.0% to 4.5%
\n\t\tOperating income 7.0%-7.5%, including an expected 30bps tailwind from LIFO
\n\t\tAdjusted EPS $6.36 to $6.46, up from the previous range of $6.10 to $6.20, <\/strong>and above the estimate of $6.28.<\/p>\n

<\/a><\/p>\n

The improved forecast underscored the resilience of Walmart\u2019s massive grocery business, which is enabling the company to grab more sales even as consumers think twice before buying discretionary goods. Earlier this week,\u00a0Target and\u00a0Home Depot reported sharp comparable-sales declines as consumers continued to pull back from nonessential items.<\/p>\n

While the stock initially jumped in premarket trading, some downbeat commentary from the CFO during the conference call, in which he warned of “uncertainty in the economy during the rest of the year”, hit the stock and it was subsequently unchanged.<\/p>\n

<\/a><\/p>\n

The company’s Q2 presentation is below (pdf link<\/a>)<\/p>\n<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 08\/17\/2023 – 09:02<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/walmart-erases-gains-despite-beating-and-raising-guidance-after-cautious-commentary<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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