Walmart full year revenue beats estimates, net income down 14.6%

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Walmart posted full fiscal year net income of $11.68 billion, down 14.6% compared with the previous fiscal year, but revenue and earnings per share beat expectations. The Bentonville-based global retailer posted the earnings report early Tuesday (Feb. 21).

The company also set same-store sales guidance for the next fiscal year in the 2%-2.5% range, below market expectations of around 3%. The retailer also lowered same-store sales guidance for Sam’s Club to around 5%, potentially less than half of the same-store sales result in the fiscal year ending Jan. 31.

Company execs said customers continue to reduce spending on discretionary items as they deal with ongoing food inflation. The lower-than-expected earnings guidance had the company’s share price set to trade lower in early morning trading.

Walmart shares (NYSE: WMT) closed Friday at $146.44. During the past 52 weeks, the share price has ranged between $160.77 and $117.27.

Full-year revenue was $611.289 billion, above the $572.754 billion in the previous fiscal year but above the consensus estimate of $606.7 billion. Full-year earnings per share adjusted was $6.29, also better than the consensus estimate of $6.08 per share.

Fiscal fourth-quarter revenue was $164.048 billion, better than the $152.071 billion in the same quarter of the previous fiscal year and better than the estimate of $159.76 billion. Net income in the quarter was $6.275 billion, well ahead of the $3.562 billion in the same quarter of the previous fiscal year. Adjusted earnings per share of $1.71 in the quarter beat the consensus estimate of $1.51.

The fiscal year also saw the retailer post a one-time charge of $3.1 billion related to the settlement of a national opioid lawsuit.

SEGMENT NUMBERS
Full-year revenue at Walmart U.S. was $420.533 billion, up 6.9% compared with $393.247 billion in the previous fiscal year. Operating income in the retailer’s largest segment was $20.62 billion, below the $21.587 billion in the previous fiscal year. Same-store sales for the full year, excluding fuel, was 6.6%, better than the 6.4% in the previous fiscal year.

Full-year revenue at Walmart International was $100.983 billion, slightly above the $100.959 billion in the previous fiscal year. Operating income in the segment was $2.965 billion, below the $3.758 billion in the previous fiscal year.

Full-year revenue at Sam’s Club was $84.345 billion, above the $73.556 billion in the previous fiscal year. Operating income in the segment was $1.964 billion, below the $2.259 billion in the previous fiscal year. Same-store sales for the full year, excluding fuel, was 10.5%, better than the 9.8% in the previous fiscal year.

The company also reported that Walmart U.S. eCommerce sales grew 12% in the fiscal year, with sales up 23% in the past two fiscal years.

“Total revenue was $611.3 billion, up 6.7%, negatively affected by $5.0 billion related to divestitures. Excluding currency, total revenue would have increased 7.4% to $615.1 billion,” the company noted in the report.

INVENTORY, ANALYST OUTLOOK
Inventory levels remained high for the retailer. The inventory value for the year ended Jan. 31 was $56.576 billion, slightly higher than the $56.511 billion at the end of the previous fiscal year.

Ben Bienvenu, a retail analyst with Little Rock-based Stephens Inc., said in a Feb. 17 investor note he remains bullish on Walmart’s future. He said the retailer is best positioned to hold and gain market share during an economic slowdown.

“We think the worst of the food price inflation is behind us, but we expect the lag effect of higher costs rolling through budgets for food producers to continue to keep prices elevated, and while there are pockets of steep pricing declines off of peak levels seen in the summer of last year in select fresh categories, center of the store food prices are stubbornly high,” he said in the investor note. “However, we think that as we move into the middle of calendar 2023, we are much more likely to see moderation in food inflation vs. the alternative.”

Bienvenu also said in the note that “it is in this environment of cost inflation and budget challenges for consumers across all income brackets where Walmart’s value proposition is amplified for customers.”

Stephens has a per-share target price of $170 with Walmart and maintains an “overweight” rating. (Stephens Inc. sometimes works with Walmart on investment banking and is compensated accordingly.)