Walmart, the nation’s largest retailer and private employer, is set to report its holiday quarter results on Tuesday morning, providing investors with valuable insights into the retail industry and the state of the U.S. economy. As consumers grapple with challenges like elevated grocery prices, Walmart’s performance will serve as a barometer for how they are managing their finances.
According to a survey by LSEG, formerly known as Refinitiv, Wall Street analysts expect Walmart to report earnings per share of $1.65 and revenue of $170.71 billion for the holiday quarter. These figures will shed light on the company’s financial health and its prospects for the year ahead.
Walmart had previously stated that it anticipated full-year adjusted earnings per share of $6.40 to $6.48 and a 5% to 5.5% increase in consolidated net sales. The company’s ability to meet or exceed these expectations will be closely watched by investors and industry experts.
The holiday season saw a 3.8% year-over-year increase in sales, reaching $964.4 billion, according to the National Retail Federation. However, it is important to note that these figures exclude sales at automobile dealers, gas stations, and restaurants. While this growth is promising, there are concerns that consumer spending may have dropped more than expected in January, suggesting that shoppers may have curtailed their purchases after the holiday season.
One area where Walmart has excelled is managing high inflation. The company’s value reputation has attracted families across income levels, enabling it to weather inflationary pressures better than many other retailers. Additionally, Walmart has explored new avenues for revenue generation, such as selling ads, expanding its third-party marketplace, and launching the subscription-based program Walmart+.
While other companies have announced cost-cutting measures, Walmart has taken a different approach. In late January, the company revealed plans to open or expand over 150 stores in the U.S. over the next five years. It also aims to modernize more than 1,400 existing stores to provide a more contemporary shopping experience. Walmart’s commitment to investing in its physical stores is accompanied by a significant increase in store manager wages, with an average salary of $128,000 per year and the potential for a bonus of up to 200% of their base salary.
Moreover, Walmart announced a 3-for-1 stock split in late January, indicating its confidence in its future growth prospects. The company’s shares have performed well, closing at $170.36 on Friday, representing an 8% increase since the beginning of the year. This outperformance is notable compared to the S&P 500, which has risen approximately 5% during the same period.
Looking ahead, Walmart’s CEO, Doug McMillon, has cautioned that the coming year may bring new complexities. He highlighted the possibility of deflation as prices of general merchandise and groceries decline. While this could impact Walmart’s top-line sales numbers, it may also free up cash for customers to spend on discretionary items.
As investors eagerly await Walmart’s holiday quarter results, the outcome will undoubtedly shape expectations for the retail industry and provide valuable insights into consumer sentiment and spending habits. Stay tuned for updates on this developing story.
