Walmart posts strong Q4 fueled by grocery gains, higher-income shoppers

Walmart had a strong holiday season, with fourth-quarter sales and earnings topping estimates but it offered weak guidance for the year ahead.

The retail giant forecast slower sales and profit growth amid a slowdown in sales of discretionary goods.  Despite the disappointing guidance, Walmart CEO Doug McMillon struck a positive note in his statement.

We’re excited about our momentum,” McMillon said. “The team delivered a strong quarter to finish the year, and as our results in the last two quarters show, they acted quickly and aggressively to address the inventory and cost challenges we faced last year. We built momentum in the third quarter and that continues. We are well-positioned to start this fiscal year.”

Amid higher priced during the holiday quarter. Walmart said higher-income customers made up nearly half of its sales gains during the fourth quarter,

The world’s largest retailer reported a net income of $6.28 billion, or earnings per share of $2.32, for the quarter ended Jan. 31, up from $3.56 billion, or $1.28 per share, in the year-ago period. Adjusted earnings per share came to $1.71, easily beating analysts’ projections of $1.51 per share.

Total revenue rose 7.3% to $164 billion, ahead of the $159.8 analysts expected. 

Same-store sales for Walmart U.S. rose 8.3%, excluding fuel, and the comp average ticket was up 6.3%. E-commerce comp sales at Walmart U.S. jumped 17%.

Walmart’s grocery business continued to grow, with comp sales up in the mid-teens. The retailer said its strength in food sales (up in the high-teens) reflected continued market share gains according to Nielsen. Walmart also noted ongoing growth in private brand penetration.

Health and wellness comp sales increased in the low double-digits, with strong pharmacy sales.

General merchandise comp sales decreased in the mid-single digits amid softness in discretionary categories including toys, electronics, home and apparel. Sales were strong in automotive and seasonal hardlines categories.

At Sam’s Club, same-store sales in January rose 12.2%.

Walmart’s global advertising business grew over 20%, led by 41% growth at Walmart Connect in the U.S.

For the full year, Walmart’s annual revenue increased 6.7% to $611.3 billion.  U.S. comp sales increased 6.6%.

For the first quarter, Walmart expects adjusted earnings per share of $1.25 to $1.30, less than analysts were looking for.

For the full year, Walmart predicts adjusted earnings of $5.90 to $6.05 per share, below the $6.50 per share analysts had projected. Full-year same-store sales are expected to rise 2.5% to 3%, missing analysts’ expectations for a 3% increase.