Wal-Mart stocks are rising. Profits rose in a difficult spring for the retail sector.

Wal-Mart posted adjusted first-quarter earnings and earnings that beat Wall Street’s expectations, boosting its fiscal year outlook — in stark contrast to other retailers reporting results this week, particularly those less focused on fundamentals.

Wal-Mart Inc. (stock ticker: WMT) reported adjusted earnings of $1.47 per share on revenue of $152.3 billion. Analysts polled by FactSet had expected adjusted earnings of $1.32 per share on revenue of $148.9 billion.

Same-store sales in the United States rose 7.4%, more than analysts had estimated at 5.5%.

“We had a strong quarter. Global corporate sales were strong, with e-commerce up 26%,” CEO Doug McMillon said in the press release. “We increased costs, increased operating margin and increased profit before sale.”

The retailer also raised its fiscal 2024 financial forecast. The company now expects adjusted earnings of $6.10 to $6.20 per share, while analysts polled by FactSet expected $6.14. Sales for the year are now expected to increase by approximately 3.5%.

Announcement – ​​scroll to continue

The outlook for the current quarter was below consensus. Wal-Mart said it expects second-quarter earnings of between $1.63 and $1.68 per share. Analysts polled by FactSet had expected a dividend of $1.71.

In the early afternoon, the stock was up 0.6% to $150.56, though it had risen to $154.29 in morning trading.

The positive reactions are not surprising. Other stores gave a more mixed picture of consumer demand, while Walmart’s annual report and forecast were unequivocally strong, boosting Wall Street’s expectations before the numbers fell.

Ahead of Walmart’s results, the retail earnings season got off to a muted start. Target (TGT) posted better-than-expected earnings, even though the big-box company sounded cautious about its financial outlook. And retailer TJX off-price

Announcement – ​​scroll to continue

cos. (TJX) also has a pessimistic outlook for the second quarter. Both stocks zigzag in response to the results.

Target and TJX are focusing more on discretionary products like clothing, a category that has taken a hit as inflation forces shoppers to spend more on essentials like food. Even Home Depot (HD) noted weakness in discretionary sales when it reported results Tuesday.

Walmart, on the other hand, excels at selling essentials and has therefore earned its reputation as a defensive investment in retail. That seems to be working now, as consumers are still focused on value given the rising cost of living and people’s continued willingness to spend on experiences like travel that were on hold during the pandemic.

Announcement – ​​scroll to continue

However, the company has not been immune to changing spending patterns. It slumped last year as shoppers quickly cut back on purchases of discretionary products such as clothing and housewares in a shift that forced management to sharply cut its guidance.

And Wal-Mart sounded the alarm again in February. The company issued weak forecasts that overshadowed its strong results, warning shoppers of malaise. By contrast, Thursday’s report was strong, prompting the company to raise its forecast, much to the relief of investors.

Wal-Mart’s results showed it sees a number of broader trends impacting the industry. While grocery sales remained strong, driving same-store sales, discretionary categories such as apparel and home goods were lower.

The company’s major grocery business has thin margins — gross margin declined in the quarter — and a slight slump in food prices could be a minor headwind later this year. However, management on the conference call indicated that they are working with suppliers to lower food prices as quickly as possible to “freeze cash for customers to use for discretionary goods … it’s taking longer than we’d like in these categories.”

Announcement – ​​scroll to continue

“Walmart’s performance in the first quarter suggests that the company is confident in the momentum and that its future outlook may be conservative,” wrote Wells Fargo analyst Edward Kelly. “The list of high-quality names where we can realistically expect to see a dividend increase this year is small, but Wal-Mart is the one making the cut.”

Management even found it was attracting new customers, including young and high-income consumers, who were drawn to Walmart’s grocery business. She noted that those who use Walmart+’s subscription services also spend more than the average shopper.

Announcement – ​​scroll to continue

The company’s e-commerce business grew 26% in the quarter, while its global advertising business grew 30%, demonstrating the company’s continued evolution away from core retail businesses into faster-growing and more profitable segments.

“Wal-Mart is undergoing a remarkable transformation, evolving dramatically from its roots as a traditional retailer to a versatile home service company,” wrote Third Bridge analyst Nicholas Cooley.

The picture was also good on the international side, with double-digit sales growth in key markets such as China, Mexico and FlipKart in India.

“The year has started well,” says CFO John David Rennie. Market seems to be fine.

Write to [email protected] and Angela Palumbo on [email protected]

About admin

Check Also

In terms of numbers, Milan van Ewijk is Dumfries’ successor: ‘Van Ewijk is not a defender’

Milan van Ewijk was clearly PSV’s teasing spirit on Sunday afternoon. Van Ewijk played a …

Bir yanıt yazın

E-posta adresiniz yayınlanmayacak. Gerekli alanlar * ile işaretlenmişlerdir