Walmart Raised Earnings Guidance Announcing $20 Billion Share Buyback

The world’s largest retailer Wal-Mart on Tuesday reported better than expected earnings before the bell with revenue $152.80B beating the expected $147.34B. WMT raised its year outlook on strong results for Q3 The company is gaining market share in consumer basics shoppers grapple with inflation. Heavy discounting and focus on keeping prices lower than competitors is working. Walmart also raised its full-year net sales expectations and announced a new $20 billion share buyback plan, pushing its shares up 6% in premarket trading.

Walmart Family Guy

Earnings

Walmart said adjusted earnings for the three months ended in October came in at $1.50 per share, up 3.4% from the same period last year and well ahead of the Street consensus forecast of $1.32 per share.

Walmart Q3 23 Fiscal Earnings:

  • Adj EPS $1.50 (est $1.31)
  • Revenue $152.80B (est $147.34B)
  • U.S. same-store sales rose 8.2% from last year, topping the Refinitiv forecast of 4.6%.
  • Inventories, which were up 25% from last year at the end of the second quarter, narrowed to a 12.7% gain over the three months ending in October.
  • Raises FY Outlook On Strong Results For Q3
  • Approved A New $20B Share Buyback Authorization

“We had a good quarter with strong top-line growth globally led by Walmart and Sam’s Club U.S., along with Flipkart and Walmex. Walmart U.S. continued to gain market share in grocery, helped by unit growth in our food business,: said CEO Doug McMillon. “We significantly improved our inventory position in Q3, and we’ll continue to make progress as we end the year.”

WMT Stock Market Reaction

  • $148.28 ▲ +9.89 (+7.15%) Pre-Market
  • $148.28 ▲ +1.62 (+1.1%) past year
  • $148.28 ▲ +51.07 (+52.4%) past 5 years

Outlook

Walmart said it expects fiscal 2023 adjusted earnings per share to fall 6% to 7%, compared to its previous forecast of a 9% to 11% decline.

Walmart expects fiscal 2023 net sales to increase 5.5%, compared to its previous forecast of a 4.5% increase.

Walmart forecast holiday quarter U.S. same-store sales, excluding fuel, to increase about 3%, below estimates of a 3.4% increase. Fourth quarter adjusted earnings per share are expected to decline 3% to 5%, compared to analysts’ estimates of a 4.5% fall.

Inventory Cleanse

Walmart enters the holiday quarter with inventories valued at nearly $65 billion, up from about $60 billion three months ago. Walmart is trying to move discounted toys, clothes and summer items. The company’s heavy discounting and focus on keeping prices lower than rivals have also helped it take market share from smaller players. However, those moves have hit the company’s gross profit margins, which tumbled 89 basis points in the third quarter ended Oct. 31.

“From The Big Billion Days in India, through our Deals for Days events in the U.S. and a Thanksgiving meal that will cost the same as last year, we’re here to help make this an affordable and special time for families around the world,” he added. “We have an amazing group of associates that make all this happen, and I want to say thank you.”

Walmart had canceled billions’ worth of orders and sold through much of its excess summer product, but it is still working to sell electronics, home goods and apparel goods, said Chief Financial Officer John David Rainey on a conference call.


Source: Walmart, Alphastreet

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