Walmart Reports Strong Q1 Results as Grocery Leads the Way
Walmart raised its full-year forecast Thursday, as fiscal first-quarter sales rose nearly 8 percent and its large grocery business helped offset weaker sales of clothing and electronics. The retailer now anticipates consolidated net sales will rise about 3.5 percent in the fiscal year. Nearly 60 percent of Walmart's annual U.S. sales come from groceries. In the quarter, sales of general merchandise in the U.S. declined mid single-digits, while sales of food and consumables increased low double-digits, CFO John David Rainey said on an investor call. Lastly, e-commerce was a bright spot for Walmart in Q1: e-commerce sales jumped 27 percent year-over-year for Walmart U.S. At Sam’s Club, e-commerce sales grew 19 percent.
Total Retail's Take: It has been a mixed week for retail earnings, with The Home Depot reporting its first annual sales decline in more than a decade and Target announcing a minimal increase in YoY sales and flat comparable sales in its fiscal first quarter. Walmart appears to be doing a better job of attracting cash-strapped and inflation-conscious consumers, most notably in its grocery category.
In an email to Total Retail, David Silverman, senior director, Fitch Ratings, offered the following on Walmart's earnings: "Walmart’s strong 1Q report and earnings beat are evidence of its improving execution and widening competitive gap around omnichannel initiatives and supply chain efficiency. The company’s share gains despite its already massive scale demonstrate its success in attracting new consumers and deepening its relationship to existing customers. The company recently outlined plans to grow revenue 4 percent annually from its sizable base of over $600 billion; producing 7.6 percent sales growth in a quarter marked by decelerating consumer spending on goods raises confidence in Walmart’s ability to achieve that goal over the next few years."
