Walmart’s Q4 Shows Continued Momentum

Mega-retailer surmounts inventory, cost challenges of past fiscal year
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“The team delivered a strong quarter to finish the year," noted Walmart President and CEO Doug McMillon in reporting the company's Q4 results.

Despite recently revealed store and technology hub closings, Walmart posted strong revenue growth globally for its fourth quarter of fiscal 2023, with solid performances in its stores and e-commerce operations. The company reported total revenue of $164.0 billion, an increase of 7.3%, or 7.9%  in constant currency.

“We’re excited about our momentum,” said Walmart President and CEO Doug McMillon. “The team delivered a strong quarter to finish the year, and as our results in the last two quarters show, they acted quickly and aggressively to address the inventory and cost challenges we faced last year. We built momentum in the third quarter, and that continues. We are well positioned to start this fiscal year.” 

Walmart U.S. comp sales rose 8.3%, and 13.9% on a two-year stack. E-commerce growth was 17%, and 18% on a two-year stack, and the retailer continued to gain market share in grocery. Sam’s Club comps grew 12.2%, and 22.6% on a two-year stack. Membership income increased 7.1%, with member count at an all-time high.

Walmart International net sales were $27.6 billion, up 2.1% but adversely affected by $0.9 billion from currency fluctuations, while constant-currency sales were $28.5 billion, a 5.5% increase, with Walmex, China and Canada leading the way. The company’s global advertising business grew by more than 20%, led by 41% growth at Walmart Connect in the United States.

Walmart’s Q4 consolidated gross profit rate dropped 83 basis points, mainly because of markdowns and sales mix. Consolidated operating expenses as a percentage of net sales fell 44 basis points, which the company primarily attributed to strong sales growth and lower COVID-related costs, partly offset by reorganization and restructuring charges incurred in the International segment. Consolidated operating income was $5.6 billion, a 5.5% decline, including the previously noted charges.

The retailer’s Q4 adjusted operating income was $6.4 billion, a 6.9% increase. Earnings per share (EPS) were $2.32; adjusted EPS of $1.71 excluded the effects of $1.16 from net gains on equity and other investments, and 55 cents from charges related to reorganization and restructuring.

For its full fiscal year 2023, Walmart’s total revenue was $611.3 billion, up 6.7%, but negatively affected by $5.0 billion related to divestitures. Excluding currency, total revenue would have grown 7.4% to $615.1 billion.

Full-year Walmart U.S. comps increased 6.6%, and 13.0% on a two-year stack. The company’s U.S. e-commerce sales grew 12%, and 23% on a two-year stack. Sam’s Club comps increased 10.5%, and 20.3% on a two-year stack, with membership income increasing 8.6%. Walmart International net sales were flat, and operating income decreased 21.1%.

Net sales increased 9.0%, and adjusted operating income rose 8.9% for retained markets on a constant-currency basis. Walmart’s global advertising business grew almost 30% to reach $2.7 billion, led by Walmart Connect in the United States and Flipkart Ads. EPS was $4.27, and adjusted EPS was $6.29.

The company generated $29.1 billion in operating cash flow for fiscal 2023 and returned $16.0 billion to shareholders through dividends and share repurchases.

For fiscal 2024 Q1, Walmart issued the following guidance: a 4.5% to 5.0% constant-currency increase in consolidated net sales; a 3.5% to 4.0% constant-currency increase in consolidated operating income, negatively affected by 235 basis points from LIFO; and adjusted EPS of $1.25 to $1.30, including an expected 3 cents from LIFO.

The company’s full-year guidance included the following: a 2.5% to 3.0% constant-currency increase in consolidated net sales increase; a 2.0% to 2.5% increase in Walmart U.S. comps, excluding fuel; am approximately 5.0% increase in Sam’s Club U.S. comps, excluding fuel; an approximately 6.0% constant-currency increase in Walmart International net sales; a slight increase in consolidated operating expenses as a percentage of net sales constant currency; and an approximately 3.0% constant-currency increase in consolidated operating income, adversely affected by 100 basis points from LIFO. 

Walmart’s board of directors also approved an annual cash dividend for fiscal year 2024 of $2.28 per share, an approximately 2% increase from the $2.24 per share paid for the last fiscal year. 

Each week, approximately 230 million customers and members visit Walmart’s more than 10,500 stores and numerous e-commerce websites under 46 banners in 24 countries. The Bentonville, Ark.-based company employs approximately 2.3 million associates worldwide. Walmart U.S. is No. 1 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America

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