During the first quarter, Walmart made significant financial strides despite weaker general merchandise sales as more and higher-earning shoppers looked to the retailer for value in consumables and food, the company reported.
Walmart posted a company net income of $1.67 billion, or 62 cents per diluted share, versus $2.05 billion, or 74 cents per diluted share, in the year-earlier quarter. Adjusted earnings per diluted share were $1.47 versus $1.30 in the year-prior period.
A Yahoo Finance-published first-quarter analyst consensus estimate anticipated adjusted diluted earnings per share of $1.32 for the quarter and revenue of $148.76 billion.
With fuel excluded, comparable store sales for Walmart U.S. were up 7.4% in the quarter year-over-year with transactions up 2.9% and average ticket up 4.4%, the company stated. E-commerce contribution was about 270 basis points. Comps for Sam’s Club, sans fuel, were up 7% in the period year over year with transactions up 2.9% and average ticket up 4%. E-commerce contribution was 160 basis points, Walmart reported.
Net sales were $151 billion and net revenue, including memberships and other income, was $152.3 billion, the company maintained, versus $140.29 billion and $141.57 billion, respectively, in the year-previous quarter. Operating income was $6.24 billion versus $5.32 billion in the period a year before.
In a conference call, Doug McMillon, Walmart president and CEO, said, food and consumables were strong but inflation hit gross margin. Walmart anticipated the challenge, with tight cost management and mutually reinforcing businesses helping it grow profit ahead of sales, he asserted. In other positive points memberships are up at Walmart and Sam’s Club, McMillon said, adding that excess inventory is coming down. Inflation in groceries and consumables is impacting discretionary spending, though, and Walmart is working to mitigate the impact on shoppers.
John David Rainey, Walmart executive vp and CFO, said in the conference call, that general merchandise sales declined mid-single digits while food and consumables sales increased low double digits. Higher-income shoppers looking for value helped boost Walmart sales in the quarter, he maintained.
In the question and answer session, John Furner, president and CEO, Walmart U.S., made the point that shrink is a significant consideration and one that has to involve the community. Given the effect of organized retail crime, store runners can’t address the problem alone. Furner said a dedicated partnership with the communities the sector serves is needed to lower shrink and reduce risks to retail employees and shoppers.
In announcing the financial results, McMillon said, “We had a strong quarter. Comp sales were strong globally with e-commerce up 26%. We leveraged expenses, expanded operating margin, and grew profit ahead of sales.”