Walmart shares dropped around 5% in premarket trading on Thursday after the retail giant projected slower profit growth for the upcoming fiscal year, despite continued sales momentum.
Investors reacted negatively to the company’s outlook, even as Walmart reported strong revenue gains and double-digit e-commerce growth.
In the fiscal ahead, Walmart expects net sales to grow 3% to 4% and adjusted operating income to rise 3.5% to 5.5% on a constant currency basis.
The forecast includes a 1.5 percentage point headwind from its Vizio acquisition and the absence of an extra day from the 2024 leap year.
Walmart also guided for full-year adjusted earnings of $2.50 to $2.60 per share, below the $2.76 per share analysts had expected.
For the first quarter, Walmart expects adjusted earnings per share of 57 to 58 cents, down from 60 cents a year ago. Net sales are seen going up between 3% and 4%.
“The company’s guidance assumes a generally stable consumer and continued pressure from its mix of products and formats globally,” the retail giant said in a statement.
Walmart earnings beat street estimates
For the holiday quarter, Walmart’s revenue rose 4% to $180.55 billion, slightly above analyst expectations.
For the fiscal fourth quarter that ended Jan. 31, Walmart reported adjusted earnings per share of 66 cents, beating the 64 cents expected.
Net income fell to $5.25 billion, or 65 cents per share, down from $5.49 billion, or 68 cents per share, in the same period last year.
Comparable same-store sales rose 4.6% for Walmart US and 6.8% for Sam’s Club, excluding fuel.
Transaction volume increased 2.8%, and average ticket size rose 1.8% year-over-year.
The company also saw its 11th consecutive quarter of double-digit e-commerce growth, with global e-commerce sales rising 16%.
Walmart also announced an increase in its annual dividend rate to 94 cents per share from 83 cents.
Shareholders of record on March 21 will receive the first quarterly dividend under the new rate—23.5 cents per share—on April 7.
Walmart’s performance in the US
Walmart’s US sales grew 5% to $123.5 billion, surpassing expectations of $122.95 billion. Comparable-store sales rose 4.6%, beating the projected 4.4% increase.
Walmart US saw broad-based sales momentum across merchandise categories, with strong seasonal sales despite a shorter holiday shopping season.
Expedited delivery options resonated with customers prioritizing speed.
US e-commerce sales surged 20%, driven by strong demand for store pickup and home deliveries, as well as increased spending by upper-income shoppers.
Comparable sales growth was driven by higher transaction counts and unit volumes, with share gains primarily from upper-income households. eCommerce sales rose 20%, reflecting strength in store-fulfilled pickup and delivery, advertising, and the marketplace.
Walmart Connect advertising sales grew 24%, supported by a 50% increase in marketplace seller advertisers.
The gross profit rate improved by 51 basis points, while membership income saw double-digit growth.
However, operating expenses deleveraged by 53 basis points.
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