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Walmart Q1 Profit Declines, But Results Top Estimates

walmart nov15 18may21 lt

Retail giant Walmart Inc. (WMT) reported Tuesday a profit for the first quarter of fiscal 2022 that declined 31.6 percent from last year, hurt by net losses on equity investments, However, adjusted earnings per share and quarterly revenues topped analysts' expectations. The retailer also raised its guidance for the second quarter and for the full-year 2022.

"This was a strong quarter. Every segment performed well, and we we're encouraged by traffic and grocery market share trends. Out optimism is higher than it was at the begining of the year," said Doug McMillon, President and CEO.

Consolidated net income attributable to Walmart for the quarter was $2.73 billion or $0.97 per share, lower than $3.99 billion or $1.40 per share in the prior-year quarter.

The results for the latest quarter include $0.57 per share of net losses on equity investments and $0.15 per share of incremental loss on the sale of operations in the U.K. and Japan.

Excluding items, adjusted earnings for the quarter were $1.69 per share, compared to $1.18 per share last year.

On average, 30 analysts polled by Thomson Reuters expected the company to report earnings of $1.21 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter, comprising net sales and membership and other income, grew 2.7 percent to $138.31 billion from $134.62 billion in the same quarter last year. Revenues grew 2.1 percent to $137.38 billion in constant currency. Analysts were looking for revenues of $131.97 billion for the quarter.

Total revenue was negatively affected by approximately $4.2 billion, related to recent divestitures in Walmart International.

Net sales grew 2.6 percent to $137.16 billion, and Membership and other income increased 21.2 percent to $1.15 billion from last year. Consolidated U.S. comp sales increased 6.2 percent.

Walmart U.S. comp sales increased 6.0 percent and net sales rose 5.0 percent to $93.17 billion, led by market share gains in grocery. Walmart U.S. eCommerce sales grew 37 percent, with strong results across all channels.

Sam's Club comp sales increased 7.2 percent and net sales grew 10.1 percent to $16.69 billion from last year. Membership income increased 12.7 percent, with total member count reaching an all-time high.

However, net sales at Walmart International declined 8.3 percent to $27.30 billion, but decreased 11.4 percent to $26.39 billion in constant currency. eCommerce sales increased 49 percent.

Net sales at Walmart International were negatively affected by $4.2 billion, or 14.1 percent, related to recent divestitures, and changes in currency exchange rates positively affected net sales by approximately $0.9 billion.

Consolidated gross profit rate increased 104 basis points, led by strength in Walmart U.S.

Looking ahead the second quarter, the company now expects earnings per share to decline in the low single digits, compared to prior guidance for a mid-to high single digits decline. Adjusted earnings per share are now projected to increase in the low single digits, excluding divestitures.

For fiscal 2022, the company now projects earnings per share to increase in the high single digits and adjusted earnings per share, excluding divestitures, to grow in the low double-digits on consolidated net sales growth in the low-to-mid single digits, with a low single digits decline in constant currency.

Previously, the company expected earnings per share to decline slightly and adjusted earnings per share, excluding divestitures, to be flat to up slightly on consolidated net sales growth in the low single digits, with a decline in constant currency.

The company said the guidance assumes that COVID-19 conditions continue to improve as well as no significant additional government stimulus packages for the reminder of the year.

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