Walmart removes full year sales and profit forecast, shares rise

By Ananya Mariam Rajesh and Siddharth Cavale

(Reuters) – Walmart raised its full-year forecast and reported better-than-expected first-quarter results on Thursday, betting that lower inflation will lead to stronger sales of groceries and non-essential goods such as clothing and electronics. .

Shares of the Bentonville, Arkansas-based company were up 6% in premarket trading. If this gain continues, the stock will reach record high on Thursday. A strong performance by the nation’s largest retailer may ease some investors’ fears of a slowdown in U.S. consumer spending.

The company reported total U.S. comparable sales, excluding fuel, rose 3.9% for its first quarter ended April 30. Average transactions – a proxy for online and store traffic – also increased by similar amounts, while shoppers also added more items to their carts, Walmart said Thursday. According to LSEG, analysts expect sales growth of 3.15%.

Online sales also increased by 22%, surpassing the 17% increase recorded during the typically strong holiday season. Growth was driven by increased sales through its pickup and delivery services and its third-party marketplace.

During the pandemic, Walmart invested heavily in online operations by expanding its range of sellers and products, while introducing Walmart Plus – a $98 per year membership that offers expedited delivery. These moves have attracted families earning more than $100,000 per year, which have become a driving force for its online operations.

“It’s good to see that sales increased because of volume, not just because of prices. The disappointing aspect is that wealthy consumers continue to do the heavy lifting,” said Brian Jacobsen, chief economist at Annex Wealth Management, which oversees Walmart through mutual funds. Keeps in. and manages ETFs.

While Americans have generally managed to navigate through higher prices, prolonged inflation has raised concerns that it could put more pressure on low-income consumers and potentially slow the anticipated recovery in spending.

Although US consumer prices rose less than expected in April, there are signs of a slowdown in domestic demand as Americans grapple with higher mortgage rates and car insurance premiums.

Despite these challenges, Jacobsen highlighted Walmart as a potential beneficiary of this trend due to its focus on lower-priced groceries and essential items.

The company reported adjusted earnings of 60 cents per share in the first quarter, handily beating the average forecast by 52-cent. Total revenue of $161.51 billion also topped estimates.

The retail giant now expects annual consolidated net sales to grow at or slightly above its prior forecast of 3% to 4% growth, and adjusted profit per share to be at or slightly above its prior forecast of $2.23 to $2.37. It will be slightly higher than previously estimated. ,

(Reporting by Ananya Mariam Rajesh in Bengaluru and Siddharth Kavale in New York; Editing by Nick Zieminski)

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