Walmart (WMT:NYE), the largest retailer in the world, announced on Tuesday that its holiday sales were good despite consumers’ reduced spending. The retailer’s revenue for the quarter ending January 27 was $164 billion, a 7.3% rise compared to the same period last year. Earnings increased to $6.28 billion from $3.56 billion the year before. In the meantime, earnings per share adjusted for one-time expenses and benefits were $1.71, exceeding Wall Street’s estimates of $1.52.
Despite the fact that consumers had reduced their spending during the regular November-December shopping season, the company’s report was positive. Although retail and restaurant sales increased last month, consumers continue to spend despite higher prices and several interest rate hikes by the Federal Reserve to combat inflation.
The retail giant generated $611.3 billion in annual revenues, a 6.7% increase from the previous year. Nonetheless, it provided cautious advice for the upcoming fiscal year, predicting that sales will climb between 2.5% and 3% and that U.S. sales will increase between 2% and 2.5%. Excluding fuel, the business forecasts adjusted earnings per share between $5.90 and $6.05. Analysts surveyed by FactSet predict, on average, $6.52 per share. In premarket trade, Walmart’s shares plunged more than 4 percent.
Similar to Amazon and other shops, Walmart stock benefited from the epidemic as homebound consumers spent more on non-essentials such as home decor. But, buyers are now more focused on basics such as groceries, leaving Walmart with a surplus of extra inventory and diminished profits from high-margin non-essential items.
In previous quarters, Walmart has observed buyers reducing their spending and opting for private brands in categories like baking products to save money. Fresh food and clothing assortments are being offered in an effort to keep high-income consumers who have been flocking to the company’s outlets in search of bargains on foodstuffs.
Despite the obstacles, Walmart’s comparable sales, which include those from established stores and online operations over the preceding 12 months, increased 8.3%, a modest increase from the previous quarter’s 8.2% increase. Internet sales grew 17%.
According to the National Retail Federation, holiday sales in November and December grew at a slower-than-anticipated rate of 5.3%, compared to 13.5% in 2021. In October, major stores such as Walmart and Target began offering discounts to help shoppers spread out their expenditures. Black Friday doorbusters, which traditionally drew enormous crowds, were also replaced with week-long bargain events.
Considering the present economic circumstances, Walmart’s accomplishment during the holiday season was an outstanding feat. The company’s results indicate that, despite retail industry issues, it is still able to attract price-conscious consumers looking for better offers.
According to data from Stock Target Advisor, Walmart stock has a consensus Strong Buy rating from 32 analysts and an average WMT stock price target of $161.28 per share over the next 12 months.