Walmart slips and rattles retail sector with lower earnings forecast (NYSE: WMT)


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Walmart (New York Stock Exchange: WMT) slips after missing estimates with missed EPS in Q1 and lower guidance in a high spending environment.

The retailer said total U.S. comparable sales rose 4% in the first quarter, beating the consensus estimate for a 2.2% increase. Same-store sales increased 3% at Walmart stores with flat transaction growth and average ticket up 3%. Same-store sales increased 10.2% at Sam’s Club locations in the United States, driven by transaction growth of 10.0%.

Consolidated gross margin rate decreased 87 bps in the quarter, primarily due to Sam’s Club and 38 bps at Walmart US due to high supply chain and product mix costs .

Consolidated operating expenses as a percentage of sales increased 45 basis points, primarily due to higher payroll costs at Walmart US

Operating profit fell to $4.5 billion for Walmart US from $5.5 billion. Operating profit fell from $1.2 billion to $0.8 billion for Walmart International. Sam’s Club operating profit was $0.5 billion compared to $0.6 billion a year ago.

Update from the CEO: “The net results were unexpected and reflect the unusual environment. Inflation levels in the United States, particularly in the food and fuel sectors, created more pressure than expected on margin mix and operating costs. We are adjusting and balancing our customers’ needs for value with the need to drive earnings growth for our future.”

Looking ahead, Walmart (WMT) now expects Q2 EPS and consolidated operating income to be flat or slightly up and full-year EPS to be down about 1%. Walmart US comparable sales are expected to rise 4% to 5% excluding fuel sales.

Shares of Walmart (WMT) fell 6.59% pre-release Tuesday at $138.45. The target (TGT) was disabled 2.01% and Costco (COST) showed a 0.85% loss.

Compare financial metrics from Walmart, Target, and Costco side-by-side.


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