June 21, 2024

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Walmart stock pops after earnings beat, retailer surpasses $500 billion in market cap

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Walmart (WMT) wowed Wall Street yet again, causing the stock to jump as much as 7% in early trading Thursday.

For its fiscal 2025 Q1, America’s biggest retailer posted revenue of $161.51 billion, higher than the $159.58 billion expected, while adjusted earnings per share also came in higher at $0.60, compared with estimates of $0.53.

“Customers are continuing to come to Walmart for not only just value but also convenience,” Walmart CFO John David Rainey told Yahoo Finance. “We see that wallets are still stretched, [customers are] still looking for value.”

In a call with investors, CEO Doug McMillon said, “The momentum we see across the business is driven by growth in units sold and transaction counts as well as market share gains, including in general merchandise. These are not inflation-driven results.”

Total US same-store sales increased 3.9% year over year, led by growth from Sam’s Club, up 4.4% as Americans sought out deals on grocery items. The wholesale retailer reached a record high level for member counts and plus members, resulting in membership income growth of more than 13%.

Its namesake stores saw same-store sales grow 3.8%, boosted by customers visiting more frequently, though ticket size was flat. The company noted that it was gaining market share among higher-income households.

Global e-commerce sales leaped 21%, boosted by store pickup and delivery as well as its online marketplace.

These results come as the company plans to cut hundreds of jobs and asked employees to relocate to its headquarters in Bentonville, Ark., the WSJ reported on Tuesday.

Walmart is the largest US employer, with 1.6 million US workers.

During the quarter, the company also conducted a stock split for the 12th time in 50 years. Its shares are up 13.9% this year, outperforming the S&P 500’s (^GSPC) 10% gain.

Ahead of the report, UBS analyst Michael Lasser wrote that “the stock has room to run” in a note to clients. He added that Q1 should demonstrate “further evidence that the stock fits well with what the market is looking for right now, a consistent business that is more insulated from ongoing macro pressures than the rest of the pack.”

“Walmart is in a double tailwind position to gain both low- and high-end consumers over the coming years,” Deutsche Bank analyst Krisztina Katai told Yahoo Finance over the phone prior to the report.

HSBC analyst Daniela Bretthauer called the stock a top pick ahead of the report.

“The future of grocery shopping is becoming increasingly omnichannel, and Walmart is America’s largest grocer,” Bretthauer told Yahoo Finance. “You have a big player online, which is Amazon, but in groceries … Walmart has a big advantage.”

Merchandise sales dropped in the low single digits, consistent with the last three quarters. But US grocery sales increased in the mid-single digits, driven by selling more fresh foods and private brand items, Stifel managing director Mark Astrachan wrote in a note to clients following results.

The company benefits from its pricing power and economy scale, as well as tech investments and its $9 billion store makeovers.

Recently, the company introduced a new private label brand named bettergoods, which offers higher-quality, trendier items priced from under $2 to under $15.

Its lucrative ad business is also boosting its top line, boasting a 24% increase in global sales and a 26% jump in US sales.

Its subscription business, Walmart+, also grew by double digits, as CEO McMillon said members engaged more frequently and spent more than other customers.

Here’s what Walmart reported in its fiscal year 2025 first quarter, compared to Wall Street estimates compiled by Bloomberg:

Revenue: $161.51 billion versus 159.58 billion

Adjusted earnings per share: $0.60 versus $0.53

Overall same-store US sales growth: 3.9% versus 3.42%

Walmart US same-store sales growth: 3.8% versus 3.45%

Sam’s Club US same-store sales growth: 4.4% versus 3.3%

Walmart US e-commerce growth: 22% versus 13.33%

Walmart employee fulfilling Instacart orders in produce aisle, North Carolina. (Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images)Walmart employee fulfilling Instacart orders in produce aisle, North Carolina. (Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images)

Walmart employee fulfilling Instacart orders in the produce aisle North Carolina. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images) (UCG via Getty Images)

For the full fiscal year 2025, the company expects net sales to grow on the higher end of 3% to 4% and for operating income to grow on the higher end of 4% to 6%.

“We will revisit our full-year guidance as we exit [the] second quarter. This is more aligned with our historic cadence of updates, and consistent with the philosophy we have as a management team to recognize early momentum, but to also maintain prudence early in the year given the macro uncertainty and so much of the year is still ahead of us,” CFO Rainey said on a call with investors following fiscal year 2025 Q1 results.

Correction: A previous version of this article misspelled the last name of Walmart CEO Doug McMillon. We regret the error.

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].

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