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If you think that conducting layoffs and summoning your employees to relocate in Arkansas sound like the actions of a dying business, Walmart would like to prove you wrong.
The retail behemoth beat analyst expectations for the first quarter of this year, bringing in an eye-popping $161.5 billion in revenue — well above the $159.58 billion projected by analysts, and a 5.8% increase year-over-year. Adjusted earnings per share came in at $0.60, beating forecasts of $0.53, while Walmart’s same store sales also grew 3.8% year-over-year, beating expectations of 3.7%. That’s a lot of Bob’s Pickle Pops.
Walmart CEO Doug McMillon told investors that the quarter “was stronger than anticipated” in the Thursday morning earnings call, adding that the revenue growth was not the result of sticky inflation, but was instead driven by consumer demand for their products and gains in market share.
Investors boosted the stock during trading last week, helping the Dow cross 40,000 for the first time ever. The company has gained about 20% year-to-date, far outpacing the S&P 500’s gain of about 12% over the same period.
Yet traders weren’t just betting on the success of Walmart, but also on the discount retail sector as a whole amid high inflation. Analysts and investors view Walmart’s stock as a bellwether for the rest of the economy because the discount retailer is often buoyed due to its focus on low-cost essentials, which tend to sell well even when the rest of the economy is slowing or prices elsewhere are rising.
However, the company has said its growth this quarter has also been propelled by higher income shoppers with more discretionary money to spend, despite the fact that inflation has remained sticky even as it slows. The company is also trying to be a corporate jack of all trades, expanding beyond groceries and household staples to an advertising business vertical, as well as automating its supply chain.
All in all it was a very good quarter for Walmart, and the company expects the good times to keep rolling. Management raised their projections for year-end growth, saying they now expect net sales to increase by 3% to 4% and for earnings per share to come in somewhere between $2.23 to $2.37. —LB