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Walmart Posts Strong 1st Quarter

Retailer exceeds Wall Street projections, reporting lifts in revenue, income and sales
Lynn Petrak, Progressive Grocer
Walmart digital
Robust e-comm sales contributed to Walmart's better-than-expected first quarter performance.

The first quarter of the fiscal year is in the bag for Walmart, which filled the period with some solid accomplishments to beat analyst expectations. For the 13-week period ending April 26, consolidated revenue rose nearly 6% to top $161.5 billion and adjusted operating income climbed 13.7%, fueled by higher gross margins and growth in membership income. Net sales for Walmart U.S. edged up 4.6%, coming in at $108.7 billion for the quarter compared to $103.9 billion for the same period last year, while same store sales rose 3.8%. 

The positive results have led to positive sentiment, as the retail behemoth updated its outlook. Walmart anticipates a 3.5%-4.5% gain in consolidated net sales and 3%-4.5% lift in consolidated operating income during the second quarter. For the rest of the fiscal year, the retailer expects to land at the higher range of its projected 3%-4% growth in net sales and 4%-6% growth in operating income.

Thanks to the retailer’s continued investment and focus in this area, e-comm was a bright spot during the opening quarter. Digital sales surged 21% in Q1, with gains in store-fulfilled pickup and delivery and marketplace segments. Elsewhere on the grocery tech side, Walmart’s global advertising business increased by 24%, with 26% growth for Walmart Connect in the United States.

“Our team delivered a great quarter. Around the world our goal is simple we’re focused on saving our customers both money and time. It’s inspiring to see how our associates are simultaneously executing the fundamentals and innovating to make shopping with us more enjoyable and convenient. We’re people-led and tech-powered, and that combination is propelling our business,” declared President and CEO Doug McMillon. 

Digging into the quarterly performance, Walmart attributed its sales increases to strong transaction counts and unit volumes and a slightly positive lift from like-for-like inflation. Higher-income shoppers are also propelling sales, as convenience and value propositions resonate with broader audiences mindful of cost, the retailer reported. 

Shoppers are increasingly turning to Walmart for lifestyle solutions, which is helping boost the bottom line. “Carrying forward the success we saw last year in our seasonal programs, we’re using celebrations and festive events to reinforce our value proposition and customers are responding. Chinese New Year, Valentine’s Day and Easter drove stronger sales across categories, including general merchandise," said CFO John David Rainey during the earnings call. "We’re also working with suppliers to bring innovation to U.S. customer while leaning into our own private brands as sources of value, quality and newness.”

Rainey also stressed the importance of lifestyles as drivers for e-comm. “We’re always focused on value, over the last few years, we’ve been talking about flexibility and the ability to be convenient, whether a customer wants to shop at the counter, at the curb or delivery. It’s been exciting to see just these last few months that delivery is now exceeding the other channels, which is great, and which gives the customer a lot of optionality,” he said. “We’ve expanded that service earlier in the morning, later at night, so we’re becoming even more convenient for individuals, for shoppers and families in terms of being able to serve all of their needs."

Grocery tech investments are enhancing other aspects of the business, too. McMillon announced during the earnings call that Walmart's Data Ventures division is widening the Walmart Luminate data analytics product suite into Canada and Mexico. This global expansion follows the phased launch of the platform in the U.S., beginning with shopper behavior and followed by channel performance and customer perception analytics. “Our technology team continues to deliver the innovation that helps us drive our business. The team continues to build and improve the platforms for marketplace and data that we’re using across countries,” he remarked.  

Meanwhile, it was a strong Q1 for Sam’s Club, too, which reported stronger dollar and unit share in grocery. Net sales at Sam’s Club increased 4.6% to reach $21.4 billion during the period. Here, too, digital sales were a bright spot, with an 18% elevation in e-comm sales and an expansion in membership income. 

As the second quarter gets underway, Walmart continues a parallel path to finding new avenues for growth and cutting costs. The retail giant recently announced the launch of its Bettergoods private label brand while simultaneously closing the Walmart Health Business division. And as it pursues acquisitions, like buying smart TV maker Vizio during the first quarter, Walmart is also revamping its internal structure, recently streamlining staff and corporate offices.

[RELATED: Walmart Slashing Corporate Jobs in Cost-Cutting Move]

Each week, about 240 million customers and members visit Walmart’s approximately 10,500 stores and numerous e-commerce websites in 19 countries. The Bentonville, Ark.-based company employs approximately 2.1 million associates worldwide. PG also named Walmart one of its Retailers of the Century.

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