Walmart saw its quarterly revenue growth by about 6%, on Tuesday. Walmart revenue growth was seen as shoppers turned to the big-box retailer throughout the holiday season and the company’s global e-commerce sales grew by double digits. Walmart also announced smart TV maker Vizio acquisition on Tuesday to accelerate growth of its advertising business. Walmart is acquiring the company for $2.3 billion, or $11.50 per share.
As per Chief Financial Officer John David Rainey customers have still shown discretion with purchases. They are putting fewer items in their baskets but shopping more frequently. Electronics, TVs, computers and some other expensive items have been a tougher sell, Rainey added.
Yet, he said even after the holiday rush, Walmart saw continued sales strength.
Walmart earnings report
Here’s what Walmart reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:
Walmart’s earnings per share: $1.80 adjusted vs. $1.65 expected
Walmart’s revenue: $173.39 billion vs. $170.71 billion expected
Walmart quarter earnings: Net income fell to $5.49 billion or $2.03 per share, compared with $6.28 billion, or $2.32 per share, in the year-ago period.
Revenue increased from $164.05 billion in the year-ago period.
Walmart said it expects consolidated net sales to rise 4% to 5% in its fiscal first quarter. It also anticipates adjusted earnings of $1.48 to $1.56 per share on a pre-stock split basis.
For its fiscal 2025, the retailer expects consolidated net sales will climb 3% to 4%. Walmart anticipates adjusted earnings will be $6.70 to $7.12 per share on a pre-stock split basis.
Walmart’s e-commerce sales growth
Walmart has leaned into new ways to make money, such as selling ads, expanding its third-party marketplace and offering a subscription-based program called Walmart+.
Comparable sales, an industry metric also known as same-store sales, rose 4% for Walmart U.S. Walmart global e-commerce sales jumped 23% year over year, topping $100 billion in total. In the U.S., Walmart e-commerce sales rose 17% as shoppers used curbside pickup and got orders delivered to their homes.
Customer transactions increased 4.3% compared with the year-ago period in the U.S. However, average ticket, or the amount that a customer spent, declined slightly.
Walmart’s earnings growth
Reason for Walmart’s earnings growth is the shift. The company is selling more than just cereal, socks and shampoo.
Walmart has shifted into more profitable businesses as part of its future. For instance, the retailer makes money from packing and shipping online orders for sellers that are part of its third-party marketplace. It had a delivery business that drops off purchases from major companies such as Home Depot, and local shops such as bakeries.
Walmart digital transformation also helped in its revenue growth. It was selling more ads, posting gains for the business of about 33% globally and 22% in the U.S. year over year.
The company has also boosted efficiency by adding automation to distribution centers that replenish store shelves and fulfillment centers that keep up with online orders.
Vizio acquisition
As per Rainey, Vizio acquisition will be “an accelerant” for the “high-margin, fast-growing part of our business.” By using the Vizio operating system, Walmart could not only show ads, but also have better data that tracks how customers engage with the ad and if it leads to purchases.
On an annual basis, Walmart now expects to grow sales more than 5% and operating income more than 8% on average, Rainey told investors on Tuesday’s earnings call.
Walmart’s e-commerce business is not yet profitable, but Rainey said the company is getting closer. He said the cost of fulfillment has fallen 20% over the past year, as the company drops off more packages on each delivery route and sells related services, such as online ads.
Customers are shopping more on Walmart’s website and app, which helps create those denser delivery routes. Weekly active e-commerce customers grew 17% over the past year, he said.
Walmart’s expansion
As many other companies have announced cost cuts, Walmart has done the opposite. It announced in late January that it would open or expand more than 150 stores in the U.S. over the next five years. That’s on top of an aggressive plan to upgrade more than 1,400 of its existing Walmart stores to have a more modern look.
Increased wages
Along with those store investments, Walmart said it would raise store manager wages to an average of $128,000 per year and make managers eligible for a bonus of up to 200% of their base salary.
It also announced a 3-for-1 stock split in late January, as shares hovered near an all-time high.
On Tuesday, Walmart said it would reward shareholders, too. It is raising its dividend by 9% this year, the largest increase in more than a decade.
Walmart stock update
Walmart shares closed 3% higher Tuesday after the company shared its results, outlook and acquisition news. Shares of Walmart are up more than 11% this year, outperforming the S&P 500, which is up about 4% during the same period.
