Walmart, the nation’s largest retailer and private employer, is set to release its holiday quarter results, providing insight into the retail industry and the state of the U.S. economy. As a barometer of consumer sentiment, Walmart’s earnings report is highly anticipated by investors and analysts alike.
According to Wall Street analysts surveyed by LSEG (formerly known as Refinitiv), Walmart is expected to report earnings per share of $1.65 and revenue of $170.71 billion. These figures will shed light on how consumers are managing challenges like elevated grocery prices and their overall financial outlook.
Despite potential challenges, there are early signs that bode well for Walmart’s fourth-quarter performance. The National Retail Federation reported a 3.8% year-over-year increase in holiday sales, reaching $964.4 billion. However, it’s important to note that these figures exclude sales at automobile dealers, gas stations, and restaurants. On the other hand, consumer spending dropped more than expected in January, suggesting that shoppers may have paused purchases beyond necessities as holiday bills came due.
One key factor that has contributed to Walmart’s resilience amid high inflation is its value reputation. The retailer has successfully attracted families across income levels by offering competitive prices. Additionally, Walmart has explored new revenue streams, such as selling ads, expanding its third-party marketplace, and introducing a subscription-based program called Walmart+.
While many companies have announced cost-cutting measures, Walmart has taken a different approach. In late January, the retailer announced plans to open or expand over 150 stores in the U.S. over the next five years. It also unveiled an aggressive plan to upgrade more than 1,400 existing stores for a more modern look. Furthermore, Walmart increased store manager wages to an average of $128,000 per year and made managers eligible for a bonus of up to 200% of their base salary. These strategic moves signal Walmart’s commitment to growth and investment.
In late January, Walmart also announced a 3-for-1 stock split as its shares reached an all-time high. This move aims to make the stock more accessible to investors and potentially attract more interest in the company.
Looking ahead, Walmart’s CEO, Doug McMillon, has highlighted potential complexities for the year ahead. He mentioned the possibility of deflation as prices of general merchandise and groceries decline. While this could impact Walmart’s top-line sales figures, it may also free up cash for customers to spend on discretionary items.
As of now, Walmart’s stock has performed well, closing at $170.36 on Friday, representing an 8% increase since the beginning of the year. This outperforms the S&P 500, which rose approximately 5% during the same period.
In conclusion, Walmart’s upcoming earnings report will provide valuable insights into the retail industry and the state of the U.S. economy. Investors and analysts will closely analyze the company’s performance, particularly in light of broader trends and challenges. With its strong value proposition and strategic investments, Walmart has positioned itself well to navigate potential complexities in the year ahead.
