Stocks may have had a great opening on Wall Street Thursday, but they didn’t end well. The green (and record for the Dow) ended in the red. However, for the retail giant Walmart, it was a record-setting day as earnings and revenue topped all forecasts, defying gloom about weak consumer demand.
The slowdown in retail sales in April did affect Walmart, which stated that February and March were stronger months (the move of Easter into late March from April was the trigger).
But that didn’t stop the retailer from selling more than $US161 billion in goods and services across the US, Canada, Mexico, and other parts of the globe in the three months to April (its first quarter).
And to top it off, the company upped its outlook. The giant reported gains in its expanding e-commerce business, saw higher returns from newer businesses like advertising, and won over more high-income shoppers.
Walmart said it now expects to hit the high end or slightly surpass its previous full-year guidance. Walmart had expected net sales growth of 3% to 4%.
That saw the shares of the company hit an all-time high Thursday and closed about 7% higher.
Same-store sales for Walmart climbed by 3.9%, excluding fuel, just better than inflation at 3.4%. The industry metric compares sales from stores and (Sam’s) clubs open for at least a year. At Sam’s Club, same-store sales rose 4.4% year over year, excluding fuel (it’s a rival to Costco).
Walmart reported revenue of $US161.51 billion vs. $US159.50 billion from analysts and $US152.3 billion reported for the same quarter in 2023. Sales rose an extra 1% because of the extra day in February.
E-commerce sales shot up by 22% year over year for Walmart’s US stores thanks to big rises in click-and-collect sales and delivery of online orders, as well as the company’s growing third-party marketplace sales. Walmart’s adjusted operating income jumped to $US7.10 billion, compared with $US6.2 billion a year ago.
Walmart Chief Financial Officer John David Rainey told CNBC that the retailer had picked up more sales in its huge grocery business as a result of the widening gap between the price of cooking at home and buying food at fast-food chains or restaurants.
This is a trend McDonald’s has reported as it finds people earning $US45,000 a year or more staying away from the chain. McDonald’s is now developing a $US5 meal offer, but it will have to win over skeptical franchisees in the US.
More interesting for retailers generally was the news that for the first time, Walmart’s delivery business surpassed its store pickup in terms of volume.
“We’ve got customers that are coming to us more frequently than they have before and newer customers that we haven’t traditionally had, and they’re coming into a Walmart whether it’s a virtual store online, or whether it’s one of our physical stores,” Rainey told CNBC.
Thursday's near 7% gain took the rise in Walmart shares year-to-date to more than 20% – nearly double the 11.7% rise for the S&P 500.
