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Walmart Releases Q2 FY 2023 Financial Results

08/16/2022

In an August 16th release, Walmart Inc. (WMT) posted financial results for the second quarter of fiscal 2023. Along with other retailers, both brick-and-mortar and online, all are subject to the pressures from increased costs for goods, transport and labor in a competitive environment still recovering from COVID. As a multinational company, Walmart faces risks associated with currency fluctuation, geopolitical events and adverse policies by regulators in host-Nations. Walmart serves as a bellwether for U.S retail combining groceries, clothing, electronics, drugs, tolietries and household necessities.

 

For the second quarter of FY 2023 ending July 31st 2022, net income was $5,149 million on total revenue of $152,859 million.  Comparable figures for the second quarter of fiscal 2022 ending July 31st 202, were net income of $4,276 million on total revenue of $141,048 million. Diluted EPS increased from $1.52 for the second quarter of FT 2022 to $1,88 for the most recent quarter.

 

Gross margin fell an absolute 1.2 percent to 24.2 percent and operating margin fell 0.8 percent to 4.5 percent from the second quarter of FY 2022 to the recently completed quarter.

 

In an interview on CNBC following the release, Doug McMillon, CEO and president sounded an optimistic note regarding progress in reducing excess inventory valued at $1.5 billion. He noted the impact of inflation on consumer spending with an evident pattern of moving from discretionary spending including clothing to groceries and household necessities. This affected demographics with annual family incomes progressively from $50,000 extending to $100,000 at present. Despite an increase in goods sold, of which two thirds is imported, coupled with additional expenditure on wages and transport, the Company has experienced difficulty in constraining prices. McMillon indicated that management is attempting to compromise between the needs of customers and shareholders. He expects food inflation to continue through early 2023 and then decline. In response to questions posed by Courtney Reagan, McMillon considers Walmart well positioned for seasonal demand through 2022. The Company is building E-commerce extending the Paramount service to all Walmart + members and gaining penetration in the advertising business as part of the comprehensive  omnichannel concept for the enterprise.

 

For the second quarter of FY 2023 segment results comprised:-

 

Walmart US: Net sales $105,100 million. Operating income $5,700 million. Comparable same-store sales up 6.5 percent.

International: Net sales $24,400 million. Operating income $1,000 million.

Sam’s Club: Net sales $21,900 million. Operating income $400 million. Comparable same-store sales up 9.5 percent.

 

Walmart operates more than 10,500 stores worldwide of which 5,400 are in the U.S. including 600 Sam’s Club warehouses. Walmart operates 46 banners in 24 nations.

 

Forward guidance for FY 2023 included:- 5.5 percent increase in consolidated revenue, 4.0 percent increase in same-store sales and both operating income 8 to 10 percent lower than FY 2022.

 

On July 31st 2022, WMT posted assets of $247,199 million with long-term debt and lease obligations of $47,361 million. The Company had an intraday market capitalization of $362,430 million at noon on August 16th post-release. WMT trades with a forward P/E of 23.3 and has ranged over a 52-week period from $117.27 to $160.77 with a 50-day moving average of $125.91.  Twelve-month trailing operating margin was 4.2 percent and profit margin 2.3 percent.  Return on assets over the past twelve months was 6.3 percent and the return on equity 15.5 percent. At close of trading on August 15th pre-release, WMT was priced at $132.63. Post-release on August 16th WMT opened at $139.39. This was slightly above the closing price following the May 17th release for the first quarter that revealed a significant earnings miss  and representing the worst single-day fall for WMT in 35 years.