Walmart Profit Surges as Retailer Improves Inventory; Shares Rise

WMT also announces $3.3 billion in charges for opioid settlement

By
Nathan Reiff
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Nathan Reiff has been writing expert articles and news about financial topics such as investing and trading, cryptocurrency, ETFs, and alternative investments on Investopedia since 2016.
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Published November 15, 2022
Walmart store in Teterboro, New Jersey

Michael Brochstein / SOPA Images / LightRocket / Getty Images

Key Takeaways

  • Walmart's U.S. comparable sales (excluding fuel sales) rose by 8.5%, more than double analysts' estimates for Q3.
  • Comparable sales gauges the rate of growth generated by Walmart's existing stores and clubs in the U.S. as well as through e-commerce sales.
  • Walmart profit and revenue came in ahead of analyst predictions.
  • Walmart also announced a $3.1 billion settlement for opioid lawsuits that caused it to take $3.3 billion in charges in the latest quarter.
Walmart Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat $1.50 $1.31
Revenue Beat $152.8B $147.2B
Comparable Sales Growth (YOY) Beat 8.5% 4.1%

Source: Predictions based on analysts' consensus from Visible Alpha

Walmart (WMT) Financial Results: Analysis

Walmart Inc. (WMT), the largest U.S. retailer by sales in 2021, beat analysts' profit estimates for the third quarter of its fiscal year thanks to gains in its Walmart U.S., Sam's Club U.S., Flipkart, and Walmex businesses. Its shares jumped 7% in early trading, even as it said it will pay $3.1 billion to settle opioid lawsuits.

Walmart’s adjusted earnings per share (EPS), excluding certain items, rose 3% to $1.50, compared with a consensus estimate of $1.31. Revenue jumped 9% to $152.8 billion, also above expectations. The earnings report came as Walmart agreed to join a landmark settlement with several U.S. states and cities, taking a charge of $3.3 billion in the quarter.

Walmart said it made significant improvements to its inventory position after supply chain issues and adjustments after the early stages of the pandemic led to excess inventory, which analysts expected might force discounts heading into the holiday season. Walmart already had cut its outlook for FY 2023 as a result of inventory concerns. The company also said gains in market share in its grocery business helped to propel growth.

WMT Total U.S. Comparable Sales Growth

Walmart's U.S. comparable sales, excluding fuel, increased by 8.5% double the 4.1% rate expected by analysts, driven by growth in both the company's Walmart U.S. and Sam's Club businesses. The metric, also referred to as same-store sales, measures the performance of stores and clubs that have been open during the previous 12 months and includes e-commerce sales. The measurement gauges a company's ability to generate additional revenue from established stores.

WMT Outlook and Stock Performance

Walmart said it expects consolidated net sales growth of roughly 3% for its Q4 FY 2023, reflecting currency fluctuations, and U.S. comparable sales growth excluding fuel of about 3% as well. The company expects adjusted EPS to decline by between 3% and 5%. However, Walmart raised its full-year guidance based on the Q3 performance and now says adjusted EPS for the year will decline between 6% and 7% and net sales to grow by about 5.5%.

Walmart shares rose 7% in early trading as of 9:45 a.m. New York time. The company's stock is down 4% in the last year while the S&P 500 Index has dropped by 15%.

Walmart's next earnings report (for Q4 FY 2023) is expected to be released Feb. 21, 2023.

Article Sources
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  1. Walmart Inc. "Q3 FY23 Earnings Release," Pages 1, 2, 5, 8, 12, 13.

  2. Visible Alpha. "Financial Data."

  3. National Retail Federation. "Top 100 Retailers 2022 List."

  4. The Wall Street Journal. "Walmart to Pay $3.1 Billion to Settle Opioid Lawsuits."

  5. CNBC. "Retailers’ Biggest Holiday Wish Is to Get Rid of All That Excess Inventory."

  6. CNBC. "Walmart Shares Slump After Retailer Cuts Profit Outlook on Inflation Concerns."

  7. Walmart Inc. "Form 10-K for the Fiscal Year Ended Jan. 31, 2022," Page 34.

  8. Yahoo! Finance. "Walmart Inc. (WMT)."

  9. TradingView. "Price Chart: WMT and S&P 500."

  10. MarketScreener. "WALMART INC. (WMT)."

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