Walmart said Thursday that holiday quarter sales rose nearly 6% and its quarterly earnings and revenue beat Wall Street expectations as gains in e-commerce, advertising and its third-party marketplace boosted its business.
For the full current fiscal year, Walmart said it expects net sales to increase 3.5% to 4.5% and adjusted earnings per share to be between $2.75 and $2.85. This earnings outlook is below Wall Street’s expectations of $2.96 per share, according to LSEG.
In an interview with CNBC, Chief Financial Officer John David Rainey said fast store deliveries help Walmart attract more shoppers, especially those with higher incomes.
“Our ability to serve our customers at the scale we have, combined with the speed we now have, really translates into continued market share gains,” he said.
Rainey said the company’s market share gains were across all income levels, but were greatest among higher-income households. For example, in the case of fashion, a category that saw mid-single-digit percentage growth in the fourth quarter, almost all of that increase came from households with annual incomes above $100,000, he said.
In the coming months, Rainey said he expects price increases due to inflation and President Donald Trump’s tariff hikes to ease. Grocery inflation at Walmart in the fourth quarter was just above 1%, while it was slightly higher for general merchandise, he said.
“It seems like it’s a little more normalized pricing environment,” he said. “I think we have, largely as a retail industry, absorbed or seen the impact of the tariffs.”
While the comment is good news for many U.S. shoppers who shop at the nation’s largest grocer, it may be too early to tell what pricing trends at the retailer will mean for the rest of the economy. Although Walmart is considered a key barometer for the broader retail industry, it has traditionally had more power than its competitors to keep prices low, in part because of its size.
Here’s what the big-box retailer reported for the fiscal fourth quarter compared to Wall Street estimates, according to a survey of analysts by LSEG:
- Earnings per share: 74 cents adjusted versus 73 cents expected
- Income: $190.66 billion versus $190.43 billion expected
Shares of Walmart wobbled in choppy premarket trading early Thursday.
Still, as of Wednesday’s close, the company’s shares have climbed about 22% over the past year and about 14% since the start of this year. That’s more than the S&P 500’s 12% gain over the past year and rise of less than 1% year to date.
Walmart’s results Thursday also show an inflection point in the industry. For the first time, Amazon has overtaken Walmart as the largest retailer in terms of annual revenue, with the company reporting $716.9 billion in revenue for its most recent fiscal year, compared to Walmart’s $713.2 billion.
The companies aren’t an exact comparison because Amazon makes a significant portion of its revenue from cloud computing and other technology services. Still, this highlights the competition between the two rivals, especially as Walmart follows a similar model of increasing revenue sources outside of physical retail, such as ads and its marketplace.
In the three months ended Jan. 31, Walmart’s net income declined to $4.24 billion, or 53 cents per share, from $5.25 billion, or 65 cents per share, in the year-earlier period.
Excluding one-time items such as investment gains and losses, legal settlements and corporate reorganization, Walmart’s adjusted earnings per share were 74 cents.
Revenue increased from $180.55 billion in the year-ago quarter.
Comparable sales jumped 4.6% for Walmart’s U.S. operations and 4% for Sam’s Club in the fourth quarter, excluding fuel, compared to the same period last year. The industry metric, also called same-store sales, includes sales at stores and clubs open at least a year.
Walmart’s U.S. online sales increased 27% compared to the same period last year, fueled by in-store pickup and delivery of online orders, as well as the retailer’s third-party marketplace. This marks the 15th consecutive quarter of double-digit digital gains for the company. Global e-commerce sales grew 24% year-over-year.
For the company’s U.S. operations, e-commerce accounted for 23% of sales – a record for Walmart. Digital growth in the quarter included an approximately 50% increase in store deliveries and an approximately 41% increase in sales from Walmart Connect, its advertising business, the company said.
Even though Walmart is gaining ground, its growth is not evenly distributed across income groups.
In the CNBC interview, Rainey said the company is “seeing some pressure on the lowest income cohort.” He said Walmart has tracked year-over-year spending trends by income group. As in the previous quarter, he said spending by higher earners compared to lower income groups “has deviated a little bit”.
The trend he described reflects what some economists have called “K-shaped economics.”
Walmart’s quarterly report was the first under its new CEO, John Furner. Furner, former CEO of Walmart in the United States and a veteran of the company for more than three decades, succeeded Doug McMillon as Walmart’s CEO on February 1.
Investors largely expect Furner to focus on priorities similar to those of his predecessor McMillon, such as increasing Walmart’s online business, attracting more customers based on revenue and developing higher-margin businesses, such as its third-party marketplace and advertising.
Besides getting a new CEO, Walmart has hit other milestones lately. Its shares moved to the tech-heavy Nasdaq in December and its market value reached $1 trillion earlier this month.
Along with its results Thursday, Walmart also announced a new $30 billion stock repurchase authorization, replacing a $20 billion repurchase program approved in 2022.