Walmart full-year net income up 32.8%; retailer confirms Vizio deal

by Kim Souza ([email protected]) 1,489 views 

Walmart reported fiscal fourth quarter net income of $5.494 billion, down 12.4% compared with the same quarter in the previous year, and revenue totaled $173.388 billion, up 5.7%. Unadjusted earnings per share of $2.04 outpaced the consensus estimate of $1.64.

For the full fiscal year, Walmart posted net income of $15.511 billion, up 32.8% from the year-ago period. Revenue totaled $648.125 billion, up 6% year over year.

In the quarter, Walmart’s bottom line benefited from better gross margins in Walmart U.S., lower inventory and more efficient e-commerce business. Revenue was lifted by global e-commerce sales growth of 23% and global advertising revenue growth of 33%. Full-year highlights included global advertising revenue growth of 28% to $3.4 billion with strength from the U.S., Flipkart and Walmex.

“We crossed $100 billion in e-commerce sales and drove share gains as our customer experience metrics improved, even during the highest volume days leading up to the holidays. We are proud of the team and excited about building on our momentum as we work to bring prices down for our customers and members,” Walmart CEO Doug McMillion noted in the release.

He said physical stores are seeing good results, healthy e-commerce sales, and growth in services, which means Walmart can grow its bottom-line faster than top-line revenue.

STRONG U.S.
Even with consumers making more “choiceful” purchase decisions, Walmart U.S. reported 4% comp sales growth in the fourth quarter with transactions up 4.3% and the average ticket down 0.3%. That compared to comp sales of 8.3% last year when overall prices were higher. Comp sales were better than the 3.5% consensus estimate.

Walmart U.S. CEO John Furner said Walmart was working with suppliers to reduce prices which is resonating with shoppers across all income demographics. Walmart reported strong sales in grocery and health and wellness, while general merchandise sales declined modestly.

The division reported e-commerce growth of 17% led by food and consumables and the pickup and delivery business. Walmart said its overall e-commerce profitability also improved with lower final-mile costs as more orders are fulfilled from supercenters which are closer to the customers who also can use curbside pickup. Walmart said it lowered e-commerce losses by 40% in the quarter.

Walmart Connect, the advertising business, reported sales growth of 22% in the quarter. Walmart’s confirmation of the ongoing $2.3 billion acquisition of Vizio is expected to drive more advertising revenue in the future, while also being diluted to earnings in the short term, according to McMillon.

Walmart said it expects inflation to modestly decline this year while it also expects to continue growing its market share in food and consumables and its growing marketplace (e-commerce) offerings. Walmart said marketplace sellers have grown by 20%, with 30% of them using the retailer’s fulfillment services.

SAM’S CLUB, INTERNATIONAL
Total revenue at Sam’s Club grew 2% in the fourth quarter to $21.9 billion. For the year, revenue topped $86.2 billion, up 2.2%. Comp sales excluding fuel rose 3.1% in the quarter, down substantially from the 12.2% reported a year ago. Transactions rose 3.6% and average tickets declined 0.4% as members shopped more but purchased less each trip.

Sam’s Club reported solid comp sales in food and consumables. The division also reported e-commerce growth of 17%, led by delivery and curbside. Sam’s grew member income by 10% with record total membership at the end of the quarter.

Walmart’s international business had fourth-quarter revenue of $32.4 billion, up 17.6%. Operating income rose to $1.4 billion, up 397% from a year ago. The retailer said the timing of Flipkart’s Big Billion Days sales positively impacted the growth in the quarter.

E-commerce sales in the international segment grew 44% led by marketplace and omnichannel offerings and penetration across markets. Overall sales grew by strength from Flipkart, Walmex and China.

New offerings of advertising in India and Mexico led to a 76% increase in that ancillary business. McMillon said Sam’s Club is doing well in China with 47 clubs. He said Walmart is also investing in 230 more stores in Mexico and Central America over the next five years as the markets continue to grow.

OUTLOOK
Walmart forecast a fiscal first-quarter earnings guidance range of $1.48 to $1.56. The retail giant said it expects sales growth between 4% and 5% for the first quarter. For fiscal 2025, which began Feb. 1, Walmart said it expects sales growth between 3% and 4% and earnings per share range between $6.70 and $7.12.

Shares (NYSE: WMT) rose 4.19% to $177.49 following the open. Walmart shares will split 3:1 at the close of business on Feb. 22.  With the split each share will become three shares valued at a lower rate. McMillon said the split was designed to encourage more stock ownership from its employees allowing them to purchase full shares and not fractional shares.

Walmart also raised its dividend for this year by 9% marking the 51st consecutive year the dividend has increased.

Ben Bienvenu, an analyst with Stephens Inc., said Walmart’s solid beat and rosy outlook likely indicates the shares will outperform the market over the new next year. He gives the shares a “buy” rating and his target price of $190 is under review.