Walmart’s Q1 comp sales best in nine years; warns on tariffs
Walmart reported a solid first quarter with earnings that topped Street estimates amid strong online growth and rising sales at home.
The discount titan posted net income of $3.84 billion, or $1.33 a share, in the quarter ended April 26, up from $2.13 billion, or 72 cents a share, in the year-ago period. Adjusted per-share earnings came to $1.13, topping analysts’ estimates of $1.02.
Total revenue edged up 1% to $123.9 billion, missing estimates of $125.3 billion. Revenue performance was affected by foreign currency exchange rate fluctuations which impacted international sales. Net sales in the U.S. rose 3.3%. International sales fell 4.9%. On a constant currency basis, net sales overseas were up 1.2%, Walmart said.
U.S. same-store sales rose 3.4%, more than expected. It was the chain’s best first-quarter comp performance in nine years and its fourth consecutive comp gain over 3%. Transactions rose 1.1%, and the average ticket increased 2.3% at its U.S. stores.
“The U.S. operation remains the star of the show, posting a 3.4% uplift in comparable sales,” commented Neil Saunders, managing director, GlobalData Retail. “This is an exceptionally good result for a first quarter and is partly driven by higher customer numbers in stores and online. We believe that some of this is down to the fact shoppers are now becoming more price sensitive, which plays into one of Walmart’s core strengths.” (For more, click here.
E-commerce sales rose 37%, fueled by grocery and sales in the home and fashion categories. At the end of the quarter, Walmart had 2,450 U.S. stores with grocery pickup and nearly 1,000 locations with delivery. The company expects to offer grocery pickup at 3,100 of its stores and delivery at 1,600 of those locations by year-end.
Walmart remains in a heated delivery contest with Amazon. Earlier this week the discounter launched free next-day delivery (with a minimum order of $35) on 220,000 of its most popular items in Phoenix and Las Vegas. Walmart plans to roll out the service to reach approximately 75% of the U.S. population this year, including 40 of the top 50 major U.S. metro areas. The move came some two weeks after Amazon announced it was upgrading its free shipping for Prime members to one day delivery from the standard two-day.
“We’re changing to enable more innovation, speed and productivity, and we’re seeing it in our results,” said CEO Doug McMillon. “We’re especially pleased with the combination of comparable sales growth from stores and e-commerce in the U.S. Our team is demonstrating an ability to serve customers today while building new capabilities for the future, and I want to thank them for a strong start to the year.”
Similar to other U.S. retailers, the threat of additional tariffs on Chinese goods such as apparel and footwear weigh heavily on Walmart as it looks to the remainder of the year.
“We’re monitoring the tariff discussions and are hopeful that an agreement can be reached,” Walmart CFO Brett Biggs said in a statement. “Our goal is to always be the low-price leader, and we will actively manage pricing and margins as warranted with our customers and shareholders in mind. Our merchant teams have been focused on this for months and continue to execute appropriate mitigation strategies.”
On a call with reporters, Biggs said the chain was going to continue to do everything it could so that it could to keep prices low.
“However, increased tariffs will lead to increased prices for our customers,” he said.
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