- U.S. comparable sales, excluding fuel, rose at a faster pace than analysts expected.
- U.S. comparable sales indicate the sales generated by the company's U.S. stores and clubs that have been open for at least one year, including e-commerce sales.
- Walmart said that it had made good progress on containing costs in its supply chain throughout the quarter.
|Walmart Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
|U.S. Comparable Sales Growth, excluding fuel (YOY)||Beat||7.0%||6.4%|
Source: Predictions based on analysts' consensus from Visible Alpha
Walmart (WMT) Financial Results: Analysis
Walmart Inc. (WMT) reported mixed results for Q2 FY 2023, ended July 31, 2022. The company's adjusted earnings per share (EPS) beat consensus estimates, falling marginally year-over-year (YOY). Adjusted EPS was positively affected by an insurance settlement for Walmart Chile and a dividend related to the company's investment in JD.com Inc. (JD). Walmart's revenue also came in above analyst forecasts, rising 8.4% YOY. Comparable store sales growth for the company's U.S.-based stores and clubs also beat analyst estimates.
In an interview with CNBC, Walmart Chief Financial Officer (CFO) John David Rainey said that inflation was partly fueling sales growth, including among middle- and high-income shoppers attracted to Walmart for its reputation as a discount retailer.
WMT U.S. Comparable Sales Growth
Walmart's U.S. comparable sales, excluding fuel sales, grew 7.0% YOY, sharply accelerating from the prior-year quarter to the strongest growth in four quarters. The metric encompasses revenue generated by Walmart's U.S. stores and clubs that have been open during the previous 12 months. It includes sales from the company's remodels, relocations, expansions, and conversions, as well as e-commerce sales.
Comparable sales growth gauges a company's ability to generate additional revenue from established stores. If the bulk of a company's sales are being generated by established stores as opposed to new ones, this is a good sign that the company's products have not yet saturated the local market.
WMT Outlook and Stock Performance
Walmart said it expects adjusted EPS to decline by 9.0 to 11.0% YOY for Q3 FY 2023. U.S. comparable sales excluding fuel are expected to grow by about 3.0%. The company said it maintained its prior outlook for H2 FY 2023, including 3.0% YOY growth for U.S. comparable sales growth for that period as well.
Walmart stock traded jumped 6% from market close on Aug. 15, 2022, after the company's earnings release on the morning of Aug. 16, 2022. Walmart shares have provided a 1-year trailing total return of -10.6%, below the S&P 500's return of -4.1%, as of Aug. 16.
Walmart's next earnings report (for Q3 FY 2023) is expected to be released on Nov. 15, 2022.
Walmart Inc. "Earnings Release (FY23 Q2)," Pages 11, 12.
Walmart Inc. "Earnings Release (FY23 Q2)," Page 1.
Walmart Inc. "Earnings Release (FY23 Q2)," Page 2.
Walmart Inc. "Earnings Release (FY23 Q2)," Page 8.
Visible Alpha. "Financial Data."
Walmart Inc. "Form 10-K for the Fiscal Year Ended Jan. 31, 2022," Page 34.
TradingView. "Price Chart: WMT and S&P 500."
MarketScreener. "WALMART INC. (WMT)."