Walmart U.S. Comps Up 7.4 Percent as Discount Giant Tops Estimates
Walmart Inc. pressed its value advantage in the first quarter.
The retail giant’s revenues for the quarter ended April 30 increased 7.6 percent to $152.3 billion, where analysts were looking for sales of $148.9 billion.
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In a landscape where consumers are still stretched by inflation and worried anew about recession, Walmart is winning dollars with scale, low prices and its grocery business, which is gaining share with higher-income households.
While the company’s net income for the first quarter fell 18.5 percent to $1.7 billion, its adjusted earnings per share tallied $1.47, coming in 15 cents ahead of the $1.32 analysts expected, according to FactSet.
The flagship Walmart U.S. division saw comparable sales jump 7.4 percent, with transactions up 2.9 percent and the average ticket price increasing 4.4 percent — suggesting the retailer was both seeing more shoppers and that they were spending more than a year ago.
The division’s e-commerce business also showed significant growth, gaining 27 percent with strength in pickup and delivery as well as advertising, which jumped 40 percent.
On a conference call with analysts, president and chief executive officer Doug McMillon crowed over the nearly $11 billion in sales the company added in the quarter and said Walmart was working to continue growing adjusted profits faster than sales.
“The omnichannel model we’re building continues to resonate with customers and members,” McMillon said. “As expected, a higher mix of sales in the food and consumables categories negatively affected gross profit, but strong expense management and progress with our newer mutually reinforcing businesses helped us grow profit ahead of sales at 17.3 percent.”
Discretionary goods, such as apparel, continue to be a tougher sale than food.
John David Rainey, executive vice president and chief financial officer, said: “At the headline level, consumer spending has proven resilient. But below the surface, we continue to see signs that customers remain choiceful, particularly in discretionary categories.
“In Q1, we saw a nearly 360 basis point shift in U.S. sales mix from general merchandise to grocery and health and wellness,” the CFO said. “To benchmark, the magnitude of this shift exceeds the 330 basis points of category mix shift we experienced in all of last year.”
Walmart U.S. general merchandise sales showed a midsingle digit decline in the quarter while food and consumables were up in the low double digits.
While rival Target Corp. said Wednesday it was appealing to shoppers with “affordable joy” it is Walmart that has the numbers on its side right now.
Target’s first-quarter comparable sales were flat as revenues increased by 0.6 percent to $25.3 billion.
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