8.7 C
Tuesday, March 28, 2023

Walmart forecasts profit above expectations as demand holds firm

- Advertisement -spot_imgspot_img
- Advertisement -spot_imgspot_img

A Walmart sign is seen inside its department store in West Haven, Connecticut, U.S., February 17, 2021. REUTERS/Mike Segar/File Photo

Register now for FREE unlimited access to Reuters.com

Feb 17 (Reuters) – Walmart Inc (WMT.N) beat full-year profit and U.S. sales expectations on Thursday, signaling steady demand at stores even as supply-chain issues during the holiday season and rampant cost inflation pressured the retail giant’s margins.

Shares of the world’s largest retailer and a consumer bellwether rose 3.3% in premarket trading.

While Walmart has increased prices on some products, it still undercuts rivals due to its scale and negotiating power with suppliers, helping it gain market share in key areas of business such as groceries.

Register now for FREE unlimited access to Reuters.com

Walmart has previously said it has been asking suppliers to keep prices low in order to take market share, U.S. chief executive John Furner said in November. In Thursday’s release, the company said that “competitive pricing remains in focus globally.”

However, the company’s focus on its “Everyday Low Price” strategy has pushed up costs as it spends heavily to get around supply-chain challenges by speeding up shipments and chartering its own cargo ships.

The Bentonville, Arkansas-based retailer said supply chain costs were over $400 million higher than it expected at the start of the quarter.

Still, the retailer was able to eke out a 54 basis point growth in margins in the United States, helped in part by increased revenues from its Walmart Connect advertising business.

The company forecast fiscal 2023 adjusted earnings per share growth of 5% to 6%, while analysts had expected a 4.4% increase, according to Refinitiv data.

It also estimates full-year U.S. comparable sales growth of more than 3%, while analysts were expecting a 2.8% increase.

Net revenue in Walmart’s fourth quarter showed a surprise 0.5% increase to $152.87 billion, beating analysts’ average estimate of $151.53 billion, or a 0.4% fall.

Adjusted earnings per share came in at $1.53 above estimates of $1.50, according to Refinitiv data.

Sales at its U.S. stores open at least for a year rose 5.6%, excluding fuel, in line with analysts’ estimates, helped by a 3.1% rise in transactions.

However, online sales growth in the United States was just 1%, compared with a 69% surge a year earlier and 8% in the previous quarter. Analysts at Tesley Advisory Group had expected a 10% quarterly rise.

The company also raised its annual dividend by 2% to $2.24 per share.

Register now for FREE unlimited access to Reuters.com

Reporting by Uday Sampath and Siddharth Cavale in Bengaluru and Arriana McLymore in New York; Editing by Arun Koyyur and Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.


- Advertisement -spot_imgspot_img
Latest news
- Advertisement -spot_img
Related news
- Advertisement -spot_img