On 16th May (Thursday), before market open, one of the behemoths of the retail trade sector – Walmart – shall report its earnings result for the fiscal quarter ending April 2024 Walmart operates a chain of hypermarkets, discount department stores and grocery stores. By market capitalization in the global retail sector, Walmart is ranked 2nd ($486B), right after Amazon.
US Retail Sales. Source: Trading Economics
The latest US retail sales data reported an increase of 4% (y/y) in March 2024, which is subpar of the average figure 4.8% from 1993 until 2024. It rose 0.7% (m/m), following an upwardly revised 0.9% gain in February, suggesting a still-robust consumer spending. Categories that posted increases in sales include non-store retailers (2.7%), gasoline stations (2.1%), miscellaneous store retailers (2.1%), building materials and garden equipment (0.7%), food and beverages stores (0.5%), health and personal care stores (0.4%), food services and drinking places (0.4%). On the contrary, categories that reported losses in sales include sporting goods, musical instrument and book stores (-1.8%), clothing (-1.6%), electronic appliances (-1.2%), general merchandise stores (-1.15), autos (-0.9%) and furniture (-0.3%).
Walmart: Revenues & Earnings (After Deduction of Tax and Expenses). Source: Tipranks
Key financial metrics of Walmart remained solid in the previous quarter. Sales revenue were up 5.7% (y/y) to $173.4B.
The company continued to see robust growth both in-store and digitally. In the US, the company saw strength in grocery and health & wellness, while general merchandise sales declined modestly; whereas its international sales were mainly led by Flipkart, Walmex and China, helped by strong growth of festive events. E-commerce in the US has seen 17% (y/y) in sales growth, led by strength in pickup and delivery, whereas internationally the segment has seen gains of 44% (y/y), led by marketplace and omnichannel offerings, as well as penetration up across markets. Throughout FY 2024, the company’s eCommerce sales have surpassed $100 billion globally.
In addition, a division of Walmart – Sam’s Club (paid membership based warehouse, which sells groceries and household items in bulk amounts) – reported net sales up 2.0% (y/y), led by food and consumables, as well as increases in transactions and unit volumes. The division also reported 17% sales growth in e-commerce, led by curbside and delivery. Besides that, growth in membership income remains robust, up 10% from the year ago period.
Walmart: Net Sales and Operating Income. Source: Walmart Earnings Report
Operating income was up over +30% (y/y) to $7.3B. By business segments, main contribution came from Walmart International which saw a huge leap of nearly 400% (y/y) at $1.44B. Sam’s Club reported fair gains of 20.4% (y/y) to $620 million. Walmart US contributed the most at $6.08B. Corporate and support has seen losses at -$879 million, previously -$625 million. Throughout FY 2024, Walmart reported net sales at $642.6B while operating income at $27.0B. Both were up 6.1% and up 32.2% from the year ago period, respectively.
Walmart: Income Statement Evolution (Quarterly Data). Source: Market Screener
According to projections by S&P Global Market Intelligence, sales revenue is expected to reach $158B in the coming quarter, down over -8% from the previous quarter, but up 4.6% from the same period last year. Operating profit and net income are projected lower from the previous quarter, to $6.53B and $4.23B respectively. This would lead to net margin down by -0.52% from the previous quarter, to 2.68%. Operating margin is also expected to be down slightly from the previous quarter, to 4.13%.
Technical Analysis:
#Walmart share price remains traded in consolidation, testing resistance at $60.70 (FE 61.8%). The upper line of the ascending channel also serves as the next resistance to watch, in which a strong break above this line may encourage the bulls to continue testing $67.40 (FE 100.0%). Otherwise, the lower line of the ascending channel and the blue zone $55.50 – $56.50 serve as the nearest support, followed by $51, a solid resistance-turned-support level.
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Larince Zhang
Market Analyst
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