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Walmart reported record sales during the fourth quarter but projected slower growth for the upcoming year, resulting in a significant decline in its shares during early trading on Thursday. The retailer announced full-year revenue of $681 billion, marking the highest for any global company and reflecting an increase of 5.1% or $32.9 billion from the prior year. Operating income saw an 8.6% rise, aligning with the lower end of management’s previous guidance.
For the current fiscal year, Walmart forecasts a 3% to 4% increase in net sales and a 3.5% to 5.5% rise in adjusted operating profit, as per its latest guidance. If these projections are realized, it would mean a slowdown compared to last year’s growth. Analysts surveyed by Visible Alpha had anticipated revenue growth to hit 4.2%. The reduced profit outlook partially accounts for costs associated with Walmart’s acquisition of Vizio, a company specializing in connected televisions, last year.
Pre-market trading saw an 8.6% drop in Walmart’s share price. During the fourth quarter, same-store sales at U.S. Walmart locations increased by 4.6%, surpassing Wall Street expectations by 0.1 percentage points. Sales for the quarter, which concluded in January, outpaced the overall growth of U.S. retail sales during the holiday season. Global revenue for the quarter rose by 4.1% to a record $180.6 billion, slightly exceeding analysts’ consensus estimate of $180.4 billion, according to Visible Alpha. Despite a 4.4% decrease from the previous year, net income of $5.3 billion exceeded the consensus forecast of $5.2 billion.
In a new development, Walmart’s quarterly revenue fell short of Amazon’s for the first time. Amazon recently reported a 10% year-on-year increase in fourth-quarter revenue, reaching $187.8 billion, a figure that includes its cloud computing business.
Previously perceived as vulnerable to competition from Amazon, Walmart thrived over the past year by capturing business from other physical retail chains, enhancing its online ordering and delivery services, and expanding into lucrative areas such as advertising sales to suppliers, customer memberships, and offering shipping services to third-party merchants. CEO Doug McMillon commented on Thursday about the company’s momentum, citing low prices, a growing product selection, and an ecommerce sector supported by quicker delivery times.
Over the past year leading to Wednesday, Walmart’s shares experienced an 82% surge due to continuous upward revisions in its sales and profit expectations. Known for its low prices, Walmart has attracted customers amid persistent inflation in the United States. Company executives note that its ecommerce business, which includes online inventory orders and a Walmart-operated third-party marketplace, has attracted higher-income U.S. households seeking both convenience and affordable prices.
Walmart has managed to enhance profit margins through business initiatives such as advertising sales to its vendors, a segment that grew by 29% in the quarter. The company reported a 16% year-on-year increase in ecommerce sales, though this growth rate was slower than in previous quarters. Walmart attributed the slower growth to the timing of an annual sales event held at its Flipkart subsidiary in India, which occurred in the third quarter of the previous year.
