Walmart Stock Slumps After Q1 Earnings Miss, Profit Outlook Cut As Inflation Surge Boosts Costs
"Bottomline results were unexpected and reflect the unusual environment. U.S. inflation levels, particularly in food and fuel," said CEO Doug McMillon.
Updated at 7:16 am EST
Walmart (WMT) - Get Walmart Inc. Report posted weaker-than-expected first quarter earnings Tuesday, and cut its full-year profit forecast, as surging costs ate into the bottom line of the world's biggest retailer.
Walmart said adjusted earnings for the three months ended in December came in at $1.30 per share, falling 23% from the same period last year and well shy of the Street consensus forecast of $1.48 per share.
Group revenues, the company said, were tabbed at $141.6 billion, a 2% increase from last year that topped analysts' estimates of $138.88 billion. U.S. same-store sales rose 3% from last year, the company said, largely in-line with the Refinitiv forecast.
Looking into the 2023 financial year, Walmart said it sees earnings falling by around 1%, compared to a prior forecast of a 5% to 6% increase, with net sales rising by around 4%, a 100 basis point boost to its February estimate.
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“Across our businesses, we had a strong topline quarter. We’re grateful to our associates for their hard work and creativity,' said CEO Doug McMilon. "Bottomline results were unexpected and reflect the unusual environment. U.S. inflation levels, particularly in food and fuel, created more pressure on margin mix and operating costs than we expected."
"We’re adjusting and will balance the needs of our customers for value with the need to deliver profit growth for our future,” he added.
Walmart shares were marked 6.75% lower in pre-market trading immediately following the earnings release to indicate an opening bell price of $138.23 each, a move that would wipe out all of the stock's year-to-date gains.
Walmart, which normally benefits from a "value shift" in consumer sentiment given the lower price points of both its consumable and discretionary offerings, said higher-margin e-commerce sales were up only 1% from last year, but 38% on a so-called 'two year stack'.
The group also noted that operating expenses as a percentage of net sales increased 45 basis points, "primarily due to increased wage costs in Walmart U.S."
Walmart said last month that it's boosting long-haul truck driver pay by as much as 30%, to as high as $110,000 per year, as federal limits on daily driving hours, Covid staffing shortages and supply chain disruptions have increased the difficulty in finding qualified drivers.
Amazon AMZN, the world's biggest online retailer, cautioned earlier this month that costs related to hiring, supply chain disruptions and warehouse management would combine to around $4 billion over the three months ending in June following its surprise first quarter loss of $3.8 billion and the slowest year-on-year revenue growth in more than a decade.