Walmart Shares Rise on Stronger Earnings and Guidance

Published on: 16 May, 2019

Walmart Inc. (NYSE: WMT) reported its first quarter financial results before the market open on Thursday. The retailer surpassed earnings estimates, however, it missed revenue estimates. Despite missing revenue estimates, Walmart shares rose by 3.7% after providing a stronger and promising guidance.

For the first quarter, Walmart reported earnings of USD 1.13 per share on revenue of USD 123.93 Billion. Refinitiv analysts expected earnings of USD 1.02 per share on revenue of USD 125.03 Billion.

Walmart total revenue rose by 1.2% year-over-year, driven by its better-than-expected U.S. comparable store sales. Walmart’s U.S. comparable sale was 3.4% for the quarter, which marks the best Q1 in 9 years and is the fourth consecutive quarter above 3%. U.S. revenue was USD 80.3 Billion for the quarter, increasing by 3.3% year-over-year.

While Walmart’s U.S. business continued to thrive, its international operations lagged behind. The Company reported that international sales were USD 28.8 Billion for the quarter, declining by 4.9% year-over-year.

Walmart has continuously been pushing into the e-commerce marketspace now that many consumers are shifting towards technology. As a result, Walmart reported that U.S. e-commerce sales grew by 37% year-over-year. The Company highlighted that sales in online grocery and Home and Fashion categories drove the stronger growth.

Sam’s Club revenue was USD 13.8 Billion for the first quarter, increasing by 1.5% year-over-year. Comparable sales rose by 0.3%, while e-commerce sales grew by 28% year-over-year. However, reduced tobacco sales negatively affect Sam’s Club comparable sales by 270 basis points.

Walmart is heavily investing towards its e-commerce platform as well as establishing a speedy delivery operation. The Company has already acquired several e-commerce retailers such as Art.com and Bare Necessities. Walmart is targeting e-commerce sales growth of 35% for this year.

The Company also mentioned that it is on track to allow customers to pickup online grocery store orders at 3,100 store locations. Furthermore, Walmart is planning to expand its same-day grocery delivery to 1,600 locations by the end of the year.

However, Walmart Chief Financial Officer Brett Biggs noted that the tariff hike between the U.S. and China will affect some of the prices for consumers. Biggs says the Company remains hopeful that the two parties will reach an agreement.

Walmart shares have now increased by 11% this year. 

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Bryan Shin

Email: Bryan@financialinsiders.com

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