Wal-Mart stock was rising on Thursday after the retail giant reported first-quarter adjusted earnings and revenue that beat Wall Street expectations and raised its forecast for the fiscal year.
Wal-Mart (stock ticker: WMT) reported adjusted earnings of $1.47 per share on revenue of $152.3 billion. Analysts polled by FactSet were expecting adjusted earnings of $1.32 per share on revenue of $148.9 billion.
Same-store sales in the United States rose 7.4%, ahead of analyst estimates of 5.5%.
“We had a strong quarter. Globally, corporate sales were strong, with e-commerce up 26%,” CEO Doug McMillon said in the earnings release. “We raised expenses, expanded operating margin, and increased profit before sales.”
The retailer also raised guidance for fiscal 2024. The company now expects adjusted earnings of $6.10 to $6.20 per share. Analysts surveyed by FactSet expected 2024 fiscal earnings of $6.14. Revenue for the year is now expected to increase by about 3.5%.
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Guidance for the current quarter was below consensus. Wal-Mart said it expects second-quarter earnings of between $1.63 and $1.68 per share. Analysts surveyed by FactSet had expected a dividend of $1.71.
The stock rose 1.8% in pre-market trading.
Ahead of Walmart’s results, retail earnings season was off to a muted start. Target (TGT) posted earnings that were better than expected, though the large company sounded a cautious note with its guidance. TJX Cos retails off-price. (TJX) also provided a pessimistic outlook for the second quarter. Both stocks zigzag on their results.
Target and TJX focus more on discretionary products like clothing, a category that has taken a hit because inflation forces shoppers to spend more on essentials like food. Even Home Depot (HD) noted weakness in discretionary sales when it reported results on Tuesday.
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Walmart, by contrast, excels at selling essentials, which is why it has earned its reputation as a more defensive retailer.
However, the company has not been immune to changing spending patterns. For example, it was caught last year when shoppers quickly stopped buying discretionary products like clothing and household goods. The shift forced the management to lower the steering sharply.
And Wal-Mart sounded the alarm again in February. The company provided weak forecasts, which overshadowed its strong numbers, warning that shoppers are feeling the pinch. Now, Wal-Mart’s outlook is again key to the stock.
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Investors were also eager to get information on how Walmart’s lower-income core shoppers are doing.
“Looking forward, I believe Wal-Mart will continue to gain market share in the food and grocery retail business as American consumers flock to its stores amid the current economic backdrop of continued high inflation and recession fears,” said Jesse Cohen, senior analyst at Investing. com, Thursday Books.
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