Walmart Q3 FY2022 Earnings Report Recap

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Walmart (WMT) Financial Results: Analysis

Walmart Inc. (WMT) reported Q3 FY 2022 earnings that beat analysts' expectations. Adjusted earnings per share (EPS) surpassed consensus estimates, rising 8.2% year over year (YOY). Walmart's revenue came in above analyst forecasts, up 4.3% YOY. Comparable store sales growth for the company's U.S.-based stores and clubs also exceeded analyst estimates. The company's shares were up about 2% in pre-market trading. Over the past year, Walmart's shares have provided a total return of -2.1%, well below the S&P 500's total return of 29.1%.

WMT U.S. Comparable Sales Growth

Walmart's U.S. comparable sales, excluding fuel sales, grew 9.9% YOY, marking an acceleration from the second quarter of FY 2022 as well as the year-ago quarter. 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.

Walmart said in a Q3 earnings presentation that comparable sales for its U.S.-based Walmart stores reflected a number of strong underlying trends, including in-store traffic and robust consumer spending that was partly due to government stimulus and inflation. The company also noted that it continued to gain market share in grocery in the U.S. as more customers returned to its stores. E-commerce sales were also up 8% for the quarter.

WMT Outlook

Walmart raised its full-year guidance for FY 2022. It expects its U.S. comparable sales, excluding fuel, to grow more than 6%. Adjusted EPS is now expected to be about $6.40 instead of the prior estimate between $6.20 and $6.35.

Walmart Earnings Call Recap

In an earnings call after results were released, Walmart Chief Executive Officer (CEO) Doug McMillon said the company is optimistic about sales during the coming holiday season. He said that Walmart has ordered merchandise earlier than usual and that its inventory is up 11.5% in anticipation of a busy shopping season. “There’s a level of excitement in the air,” he said. “You can feel it. I’ve been walking away from these stores with a recurring thought, ‘We’re ready, we have the people, the products, and the prices to deliver a great holiday season.’”

Walmart's next earnings report (for Q4 FY 2022) is estimated to be released on Feb. 17, 2022.