May 17, 2022

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Walmart (WMT) earnings Q4 2022 beat

A worker delivers groceries to a customer’s vehicle outside a Walmart Inc. store in Amsterdam, New York, on Friday, May 15, 2020.

Angus Mordant | Bloomberg via Getty Images

Walmart topped quarterly earnings estimates on Thursday after shoppers turned to the retailer for groceries and gifts over the holidays and said it’s focused on value as some customers grow nervous about inflation.

The company said it’s on track to hit its long-term financial targets, which call for adjusted earnings per share growth in the mid-single digits in the new fiscal year. Growth at that pace is above average analyst forecasts. 

Walmart shares were up more than 1% in trading Thursday, despite a decline in the broader market due to rising tensions on the Russia-Ukraine border.

Chief Financial Officer Brett Biggs said in an interview that the discounter wants to make sure it offers competitive prices, even as costs of meat and other foods climb.

“We know that consumers are focused on inflation, and we’re continuing to watch key item pricing to ensure that we help them through this,” he said. “This type of environment plays to our strengths.”

Yet he said sales growth isn’t coming purely from price increases. Traffic to Walmart’s stores and website rose 3.1% and the company gained market share in grocery in the quarter.

Biggs said the company’s supply chain costs were $400 million higher in the quarter than planned. As omicron peaked, Covid leave costs rose $300 million higher than expected, he said.

Here’s what the company reported for the fiscal fourth quarter ended Jan. 31, according to Refinitiv consensus estimates:

  • Earnings per share: $1.53 adjusted vs. $1.50 expected
  • Revenue: $152.87 billion vs. $151.53 billion expected

Walmart posted net income of $3.56 billion, or $1.28 per share, compared with a loss of $2.09 billion, or 74 cents per share, a year earlier. Excluding items, the company earned $1.53 per share. Analysts were expecting Walmart would earn $1.50 per share, according to Refinitiv.

Total revenue rose slightly to $152.87 billion from $152.08 billion a year earlier, above Wall Street’s expectations of $151.53 billion.

Walmart’s same-store sales in the U.S. climbed by 5.6%, excluding fuel, matching the 5.6% expected by a StreetAccount survey. 

Walmart’s e-commerce sales in the U.S. increased 1% versus the year-ago quarter — or 70% on a two-year basis.

Walmart-owned Sam’s Club saw growth in both sales and membership. Its same-store sales jumped by 10.4% in the fourth quarter compared with the year-earlier period or 21.2% on a two-year basis. The company does not disclose membership count, but said membership income grew by 9.1% in the fourth quarter.

Walmart is looking beyond retail and investing in higher-margin businesses. The company’s advertising business, Walmart Connect, has grown to $2.1 billion, CEO Doug McMillon said in the company’s earnings call. Its active advertisers grew more than 130% year over year, the company said.

A Walmart-backed fintech start-up, led by a former Goldman Sachs executive, will jump in size as the company closes two acquisitions.

The retailer’s third-party marketplace and last-mile delivery service, GoLocal, have gotten bigger, too. GoLocal has nearly a thousand pickup points where the company’s contractors retrieve purchases from Home Depot and other retailers to deliver to customers.

Walmart added more than 20,000 new sellers in the U.S. last year and plans to add nearly 40,000 more this year, McMillon said. The marketplace now includes nearly 170 million unique items and it is open to sellers in India, he said.

Growth of one business supports the others, he said. For instance, a larger marketplace and climbing online sales attract more ad dollars. “There is real power in the ability to make these pieces mutually reinforcing,” he said.

In the coming year, Walmart said it expects the company’s total sales to rise about 4% and same-store sales for Walmart U.S. to increase by a little more than 3%, excluding the impact of divestitures. Biggs said same-store sales growth will be more limited in the first quarter – about 1% to 2% – as Walmart laps a period of stimulus-fueled spending.

Walmart raised the company’s dividend by a cent to 56 cents per share, and said it plans to repurchase $10 billion of its own stock in fiscal 2023. 

Shares of Walmart closed Wednesday at $133.53, down less than 1%. The company’s market value is $370.4 billion.

Walmart’s stock has underperformed the broader market. As of Wednesday’s close, shares of the company had fallen 9% over the past 12 months compared with 14% growth for the S&P 500 and 1% growth of XRT, the exchange-traded fund for the retail sector.

Read the company’s news release here.