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Walmart shares soar after falling profits, retailer surpasses $500 billion in market value
Wal-Mart (WMT) impressed Wall Street once again, causing shares to jump as much as 7% in early trading on Thursday.
In the first quarter of fiscal 2025, the largest retailer in the United States recorded revenue of $161.51 billion, higher than the expected $159.58 billion, while adjusted earnings per share were also higher than $0.60. compared to estimates of $0.53.
“Customers continue to come to Walmart not just for value, but also for convenience,” said Walmart CFO John David Rainey. told Yahoo Finance. “We see that wallets are still stretched, [customers are] still looking for value.”
In a conference call with investors, CEO Doug McMillon said, “The momentum we see across the business is driven by growth in units sold and the number of transactions, as well as market share gains, including in general merchandise. These are not These are results driven by inflation.”
Total U.S. same-store sales increased 3.9% year over year, led by Sam’s Club growth, up 4.4%, as Americans looked for deals on grocery items. The wholesale retailer reached a record level in membership and more members, resulting in membership revenue growth of over 13%.
Its namesake stores saw same-store sales grow 3.8%, driven by more frequent customer visits, although ticket sizes remained stable. The company noted that it was gaining market share among higher-income households.
Global e-commerce sales increased 21%, driven by in-store pickup and delivery as well as the online marketplace.
These results come as the company plans to cut hundreds of jobs and asks employees to move to its headquarters in Bentonville, Arkansas. The WSJ reported on Tuesday.
Walmart is the largest employer in the US, with 1.6 million US workers.
During the quarter, the company also carried out a stock split to the 12th time in 50 years. Its shares are up 13.9% this year, outperforming the S&P 500’s (^GSPC) 10% gain.
Ahead of the report, UBS analyst Michael Lasser wrote that “the stock has room to move higher” in a note to clients. He added that the first quarter should demonstrate “further evidence that the stock fits well with what the market is looking for right now, a consistent business that is more insulated from ongoing macro pressures than the rest of the pack.”
“Walmart is in a dual position to capture both low-end and high-end consumers in the coming years,” Krisztina Katai, an analyst at Deutsche Bank, told Yahoo Finance by phone ahead of the report.
HSBC analyst Daniela Bretthauer called the stock a top pick ahead of the report.
“The future of grocery shopping is becoming more and more omnichannel, and Walmart is the largest supermarket in America,” Bretthauer told Yahoo Finance. “You have a big online player, which is Amazon, but in the food sector… Walmart has a big advantage.”
The story continues
Merchandise sales fell in the single digits, consistent with the past three quarters. But U.S. grocery sales rose in the single digits, driven by the sale of more fresh foods and private-label items, Stifel managing director Mark Astrachan wrote in a note to clients following the results..
The company benefits from its pricing power and economic scale, as well as investments in technology and its $9 billion store renovations.
Recently, the company launched a new private label called best goodswhich offers trendier, high-quality items priced from under $2 to under $15.
Its profitable advertising business is also boosting its revenue, showing a 24% increase in global sales and a 26% jump in US sales.
Its subscription business, Walmart+, also grew by double digits, as CEO McMillon said members engaged more frequently and spent more than other customers.
Earnings Breakdown
Here’s what Walmart reported in the first quarter of fiscal 2025, compared to Wall Street estimates compiled by Bloomberg:
Revenue: US$ 161.51 billion against 159.58 billion
Adjusted earnings per share: $0.60 vs. $0.53
Overall U.S. same-store sales growth: 3.9% versus 3.42%
Walmart U.S. same-store sales growth: 3.8% versus 3.45%
Sam’s Club same-store sales growth in the US: 4.4% versus 3.3%
Walmart US eCommerce Growth: 22% versus 13.33%
Walmart employee fulfilling Instacart orders in the produce aisle in North Carolina. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images) (UCG via Getty Images)
For the full fiscal year 2025, the company expects net sales to grow in the upper range of 3% to 4% and operating profit to grow in the upper range of 4% to 6%.
“We will revisit our full-year guidance when we leave [the] second bedroom. This is more in line with our historical cadence of updates and consistent with the philosophy we have as a management team of recognizing initial momentum but also maintaining prudence at the start of the year given macroeconomic uncertainty and much of the year is still forward. us,” CFO Rainey said on a conference call with investors following first-quarter fiscal 2025 results.
Correction: An earlier version of this article misspelled the last name of Walmart CEO Doug McMillon. We regret the error.
Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter at @Brooke DiPalma or send an email to bdipalma@yahoofinance.com.
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