Walmart has a reputation as a more defensive retailer because it sells essentials such as food.
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Walmart
stock was rising Thursday after the retail giant posted first-quarter adjusted earnings and revenue that beat Wall Street expectations and raised its outlook for the fiscal yea.
Walmart
(ticker: WMT) reported adjusted earnings of $1.47 a share on revenue of $152.3 billion. Analysts surveyed by FactSet were expecting adjusted profit of $1.32 a share on revenue of $148.9 billion.
U.S. same-store sales climbed 7.4%, ahead of analysts’ estimates of 5.5%.
The retailer also raised guidance for fiscal 2024. The company now expects adjusted earnings of between $6.10 to $6.20 a share. Analysts surveyed by FactSet were expecting fiscal 2024 earnings of $6.14. Revenue for the year is now expected to increase about 3.5%.
The stock rose 1.6% in premarket trading.
This is breaking news. Read a preview of Walmart’s earnings below and check back for more analysis soon.
Walmart
sells groceries, which everyone needs. But just because food is a must, does that mean the discount giant has a foot up on its competitors that sell, say, clothes and lamps?
That’s the question that the company will answer when it reports earnings ahead of Thursday’s opening bell.
Analysts are looking for Walmart (ticker: WMT) to earn $1.32 a share in its fiscal first quarter, ahead of the company’s guidance of $1.25 to $1.30 and the year-ago result of $1.30. Consensus estimates put revenue at $148.94 billion.
Retail earnings season is off to a muted start. Target (TGT) delivered earnings that were better than expected, although the big-box company sounded a cautious note with its guidance. And off-price retailer
TJX
Cos. (TJX) also delivered a downbeat second-quarter forecast. Both stocks zigzagged on their results.
The focus of Target and TJX is more on discretionary products like clothes, a category that has taken a hit as inflation forces shoppers to spend more on essentials like food. Even
Home Depot
(HD) noted weakness in discretionary sales when it reported results Tuesday.
By contrast, Walmart excels at selling essentials, which is how it earned its reputation as a more defensive retailer.
That said, the company hasn’t been immune to shifting spending patterns. For example, it was caught flat-footed last year when shoppers rapidly stopped buying discretionary products like apparel and home goods. The turnabout forced management to sharply lower guidance.
And Walmart sounded the alarm again in February. The company gave a weak forecast, which overshadowed its strong numbers, warning that its shoppers were feeling pinched.
Now, Walmart’s outlook probably will again be key to the stock.
Expectations may be lower given Target’s results, but investors will be keen for information about how Walmart’s core lower-income shoppers are faring.
If customers seem as if they’re still laser focused on cutting expenses to the bone, investors may not be happy.
Or the stock could gain if there are signs that Walmart is benefiting from more shoppers trading down and tiptoeing back into the discretionary aisles.
Write to Teresa Rivas at teresa.rivas@barrons.com