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Walmart Releases Q1 FY 2024 Financial Results

05/18/2023

In a May 18th release, Walmart Inc. (WMT) posted financial results for the 1st quarter of fiscal 2024 ending April 30th 2023. All U.S. retailers, both brick-and-mortar and online are subject to the same pressures from increased costs for goods, transport and labor in a competitive environment with consumer      concern over a threatened recession. As a multinational company, Walmart faces additional 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, toiletries and household necessities.

 

For the 1st quarter of FY 2024 ending April 30th 2023 net income was $1,673 million on total revenue of $152,301 million yielding a profit margin of 1.1 percent.  Comparable figures for the 1st quarter of fiscal 2023 ending April 30th 2022, were net income of $2,054 million on total revenue of $141,569 million with a profit margin of 1.5 percent. Diluted EPS declined from $0.75 for the 1st quarter of FY 2023 to $0.62 for the most recent quarter.

 

Comparing the 1st quarter of 2024 with the corresponding quarter of the previous year, revenue was up 7.5 percent; gross margin fell from 24.5 percent to 24.3 percent; operating margin rose from 3.8 percent to 4.1 percent.

 

In the earnings call following the release, Doug McMillon, CEO and president stated, “We continue to gain market share in the grocery category, including with higher income and younger shoppers, and we saw good growth in membership income in both businesses,”

 

John Rainey CFO alluded to “shrinkage’ echoing the comments yesterday from Brian Cornell CEO of Target, although Walmart has not released a value for losses. Rainey commented on cautious spending by consumers even on food items with customers selecting the least expensive among alternatives, smaller pack sizes and avoiding luxury items in favor of necessities.

 

For the 1st quarter of FY 2024 segment results comprised:-

Walmart US: Net sales $103,900 million. Operating income $5,000 million. Strong gains in groceries. Comparable same-store sales up 7.4 percent (excluding fuel). Growth in E-commerce, 27 percent over the corresponding Quarter of FY 2023. Approximately 9 percent decline in inventory

 

International: Net sales $26,600 million. Operating income $1,200 million. Growth in E-commerce, 25 percent over the corresponding Quarter of FY 2023.

 

Sam’s Club U.S.: Net sales $20,500 million. Operating income $500 million. Comparable same-store sales up 7.0 percent. Membership growth of 6.3 percent. Growth in E-commerce, 19 percent over the corresponding Quarter of FY 2023.  Attributed to curbside pick-up service.

 

Walmart operates more than 10,500 stores worldwide of which 5,400 are in the U.S. including 600 Sam’s Club warehouses. Walmart offers 46 banners in 20 nations and employs 2.1 million.

 

Forward guidance for FY 2024 was revised upwards and included:- A 3.5 percent increase in consolidated revenue; 2.2 percent increase in U.S. same-store sales; operating income range of 4.0 to 4.5 percent, and an adjusted EPS  of  $6.10 to $6.20.

 

On April 30th 2023, WMT posted assets of $245,043 million with long-term debt and lease obligations of $56,084 million. The Company had an intraday market capitalization of $409,380 million at close of trading on May 18th. WMT trades with a forward P/E of 24.9 and has ranged over a 52-week period from $117.27 to $154.64 with a 50-day moving average of $147.17.  Twelve-month trailing operating margin was 4.0 percent and profit margin 1.9 percent.  Return on assets over the past twelve months was 6.3 percent and the return on equity 12.8 percent. At close of trading on May 17th pre-release, WMT was priced at $149.53. On May 18th WMT closed post-release at $151.47.