Walmart Shares Fall as Company Misses on Earnings Expectations in Q1

Retail giant Walmart saw its shares head lower on Tuesday as the company faces higher costs, supply chain shortage problems and inventories eating into profits.

The big box retailer reported quarterly earnings that missed Wall Street’s expectations by a wide margin.

Share of the company hit a new 52-week low on Tuesday and closed down 11.38%.

For the first quarter, Walmart reported earnings per share of $1.30 adjusted. This is compared to $1.48 expected, per Refinitiv.

Revenue at $141.57 billion was better than the $138.94 billion expected, per Refintiv.

Net income for the quarter fell to $2.05 billion, or 74 cents per share, compared with $2.73 billion, or 97 cents per share a year ago. The company’s adjusted earnings were $1.30 per share, 18 cents per share less than what financial analysts expected, according to financial market data provider Refinitiv.

Walmart’s adjusted earnings exclude gains and losses on company equity investments, as well as the incremental loss from its sale of U.K. and Japan operations during the first quarter of the previous fiscal year.

Same-store sales for Walmart U.S. saw a jump of 3% compared with the year-ago period or 9% on a two-year basis. E-commerce sales rose 1% or 38% on a two-year basis.

Walmart-owned warehouse club, Sam’s Club, saw same-store sales increase 10.2% year over year or 17.4% on a two-year basis.

CEO Doug McMillon said the discounter’s bottom line results “were unexpected and reflect the unusual environment,” as inflation in the U.S. is at a nearly four-decade high. The consumer price index, a broad measure of prices for goods and services, increased 8.3% in April compared with a year ago, according to the Bureau of Labor Statistics.

McMillon also said that Walmart employees returned from Covid leave quicker than expected and caused the company to become overstaffed during part of the quarter. He said those scheduling challenges have been resolved.

Even though the nation’s largest retailer raised its sales outlook for the year, the company also lowered its profit expectations.

Walmart says it expects net sales to increase about 4% in constant currency for the full year. It previously anticipated a 3% increase. The company said earnings per share for the year will decrease by about 1% compared with the mid-single-digit increase it previously expected, the company projected.
Chief financial officer Brett Biggs told CNBC that the second quarter is “off to a good start from a sales perspective.”

The discounter is trying to strike a balance between keeping prices low, while not letting profits slip further, McMillon told analysts on the earnings call.

“Price leadership is especially important right now and one-stop shopping becomes more than just convenience when people are paying over $4 a gallon for fuel,” he said.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.