Walmart posts another strong quarter, but shoppers are spending less per trip as inflation subsides

Walmart reported another quarter of stellar results, ending the year on a high note as its low prices attract shoppers looking for deals in a an economically challenging environment for many.

But shoppers are spending less per trip as prices are abating and the company's forecast is below Wall Street expectations.

Shares still rose 3% before the opening bell Tuesday (Feb. 20).

Walmart also confirmed that it would buy smart TV maker Vizio for $2.3 billion.

Shoppers have remained resilient, propped up by a strong labor market and steady wages. But Americans pulled back on spending in January after the holiday season splurge.

Walmart, based in Bentonville, Arkansas, is among the first batch of major U.S. retailers to report quarterly results. Industry analysts are dissecting the data, seeking to shed more light on how consumers are feeling, particularly after the government reported a significant decline in consumer spending last month.

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Economists attributed part of the pullback to snowy weather conditions, but they also said the slowdown shows that shoppers may finally be buckling under higher interest rates and other financial hurdles and that the economic momentum could be starting to fade. Consumers account for roughly two-thirds of economic activity.

Walmart has used its clout to work with suppliers to manage inflation. But while prices for some groceries such as dairy, chicken and seafood, are falling, Walmart's CEO Doug McMillion told analysts in November that he would like to see that happening in the dry grocery category as well. General merchandise prices are also receding, helping the retailer to roll back prices.

Walmart earned $5.49 billion, or $2.03 per share in the quarter ended Jan. 31. That compares with $6.27 billion, or $2.32 per share in the year ago quarter. Adjusted earnings was $1.80 per share.

Sales rose 5.7% to $173.38.

Analysts were expecting $1.64 per share on sales of $170.85 billion, according to FactSet.

For the fiscal fourth quarter, comparable store sales — those from established stores and online operating over the past 12 months — rose 4%, slower than the 4.9% for the Walmart U.S. division for the previous quarter. They rose 6.4% in the second quarter. Global e-commerce sales were up 23%, compared to 15% in the previous quarter.

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But the average ticket — how much shoppers spent per trip — slipped 0.3% in the latest quarter from a year ago even as the number of transactions rose 4.3%. It's good news that inflation is coming down, but that means Walmart and other retailers have to do more work to sell more items.

Walmart Canada reported net sales of $6 billion for the full year, an increase of 1.8%. Growth of food and consumables continued to outpace general merchandise, the retailer noted. 

Net sales for Walmart International grew 13% in the quarter to $31.2 billion (constant currency).

Walmart said late last month it plans to build or convert more than 150 stores in the next five years, while remodeling existing stores.

The plan marks a big change for the discounter. In 2016, Walmart said it was slowing new store openings and instead investing in its online efforts, technology and store remodels as it aimed to be more competitive with Amazon. A company spokeswoman said the discounter hadn’t opened a new store since November 2021.

Walmart also announced late last month that it was further sweetening the perks for its U.S. store managers as the largest private employer seeks to retain its leaders and attract new ones in a still competitive job market.

Walmart said that starting with the company’s current fiscal year U.S. store managers would receive up to $20,000 in Walmart stock grants every year.

Walmart expects earnings per share to be in the range of $1.48 to $1.56 per share for the fiscal first quarter. Analysts were expecting a $1.60 per share. It anticipates net sales to increase 4% to 5% for the period.

For the current fiscal year, Walmart said that it expects earnings for the current fiscal year to be in the per share range of $6.70 to $7.12. Analysts were expecting $7.06 per share, according to FactSet. The company expects sales to be up 3% to 4% for the year, slower than the previous year.