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Walmart gains after a 'strong beat and raise' quarter

Published 05/18/2023, 07:45 AM
© Reuters
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Investing.com -- Walmart Inc (NYSE:WMT) has posted a bigger-than-anticipated jump in sales in the first quarter and raised its annual guidance, as strong performance at its e-commerce business and an uptick in grocery demand helped offset the impact of inflationary pressures hitting other major retailers.

Total revenue during the three months to April rose by 7.6% to $152.3 billion, topping estimates of $147.8B.

Sales at Walmart's key U.S. operations rose to $103.9B due in part to a 27% surge in its e-commerce operations, particularly in advertising as well as pickup and delivery services. The group also made gains in grocery sales, including in higher-income households.

A move to "leverage expenses" also contributed to a 17.3% expansion in total operating income to $6.2B.

For this quarter, Walmart guided for earnings of $1.63-$1.68 per share with net sales expected to rise 4%. Analysts were expecting Q2 EPS of $1.70.

Still, the company boosted its full-year forecast so it now sees EPS of $6.15 (up or down 5 cents), above the prior forecast of $5.975. The new forecast is in line with the consensus.

Similarly, the full-year net sales are expected to grow 3.5%, better than the prior outlook that called for a 2.5-3% increase.

Shares in Walmart added more than 2.2% in premarket U.S. trading on Thursday.

Walmart faces a challenge to keep prices low even as inflation threatens to increase input costs, Investing.com's Damian Nowiszewski said. According to DataWeave statistics, which analyzed prices from early 2022 to February 2023, Walmart's average prices for a selected basket of nearly 600 products rose by just 3%. This is under both the average inflation rate and Walmart's closest competitors, Nowiszewski noted.

Earlier this week, rivals Target (NYSE:TGT) and Home Depot (NYSE:HD) posted sales that missed Wall Street estimates as cost-of-living worries persuaded many shoppers to rein in non-essential spending.

Citi analysts said Walmart's "strong" beat and raise "should drive the stock higher."

Stifel analysts said the results were "solid, with modest guidance raise notable as it comes following F1Q24."

"While revised EPS is consistent with coming-in consensus, we anticipate consensus EBIT to increase 1-2%, with shares performing similarly," the analysts wrote.

(Additional reporting by Senad Karaahmetovic)

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