Walmart posts net quarterly loss following $3.1 billion opioid settlement

Walmart reported revenue of $152.8 billion in its fiscal third quarter, up 8.7% compared to the same quarter in 2021, but net income fell 158% to a loss of $1.798 billion. The income drop was partially attributed to a one-time $3.1 billion settlement in a national opioid case.

The Bentonville-based retailer also reported Tuesday (Nov. 15) a per share loss of $1.11 on investments primarily related to the company’s JD.com business.

The per share quarterly loss was 66 cents, but a $1.50 per share gain prior to the one time charges. The non-adjusted gain was better than the consensus estimate of $1.33. Walmart reported operating income of $2.7 billion in the quarter, down 53% from $5.8 billion in the same period of 2021. Without the one-time adjustments, operating income was $6.1 billion, up 4.6%.

“We had a good quarter with strong top-line growth led by Walmart and Sam’s Club U.S., along with Flipkart and Walmex. We continued to gain market share in grocery, helped by unit growth in our food business,” CEO Doug McMillon noted in the press release.

In the first three fiscal quarters of the year, total revenue is $447.241 billion, up 6.5% compared with the same period in 2021. Net income in the first three quarters is $5.405 billion, down 46.5% compared with the same period in 2021.

Ben Bienvenu, an analyst with Stephens Inc., said Walmart’s results across all segments were stronger than expected. (Stephens Inc. works with Walmart on investment banking at times as is compensated accordingly.)

“We think the company is carrying significant momentum heading into the holiday season as the business is well positioned in this challenged consumer backdrop,” Bienvenu said Tuesday.

Shares of Walmart (NYSE: WMT) jumped early on Tuesday trading at $148.53, up more than 7% in heavy volume. Walmart shares are up 1.6% year to date.

SEGMENT RESULTS
Walmart U.S. reported sales revenue of $104.8 billion in the quarter, up 8.5% year over year. Walmart also benefited from higher-than-expected same-store sales in the U.S. which rose 8.2% in the quarter. Transactions were up 2.1% with average ticket up 6%. E-commerce comp sales rose 16% from a year ago and contributed about 0.80% of the overall U.S. same-store-sales comp.

Walmart said it continues to work through its inventory overhang with U.S. inventory still up 12.4% at the end of quarter, which equated to roughly $1 billion in value. Walmart said inventory overstocks came down from 20% in the second quarter and most of the product is in stores, not stuck in the supply chain like last year.

McMillon said the retailer continues to attract more higher-income households as value becomes more important to consumers. He said the inventory issues remain but Walmart is engineered as flexible.

“If we can’t sell them one thing, we will sell them something else and even lower the price if we have to,” McMillon said in his closing remarks of the analyst call on Tuesday.

Sam’s Club reported net sales revenue of $21.4 billion in the quarter, up 12.8% year over year. Comp sales, excluding fuel, rose 10% with e-commerce adding 1.2% of the gain. Membership income grew 8% in the quarter to an all-time high. Walmart does not disclose specific membership numbers. Sam’s Club did have a $1 billion charge related to inventory in the quarter which helped erode Walmart’s overall gross margin. Walmart made light of the inventory charge saying it was basically an accounting function and most of the charge will be recouped in the next couple of quarters.

Walmart International reported net sales of $25.3 billion, up 7.1% year over year. The sales were negatively impacted $1.5 billion by currency fluctuations. Judith McKenna, CEO of Walmart International, said segment inventories were in good shape heading into the holiday season. She said Walmex continues to report strong double-digit sales and operating growth helping to bolster up the segment performance.