Walmart Inc. Report posted stronger-than-expected fourth-quarter earnings Thursday, including record U.S. revenues, as the world’s biggest retailer continues to manage supply chain disruptions and wage pressures without a meaningful increase in overall prices.
Walmart CFO Brett Briggs told investors that he expects gross margins to improve this year, thanks to a better pricing mix and new business initiatives, and the easing of wage and tech costs.
Walmart shares were up nearly 4% in trading Thursday, despite a decline in the broader market due to rising tensions on the Russia-Ukraine border. The company reiterated its outlook, which was above average analyst forecasts.
Chief Financial Officer Brett Biggs said the discounter will keep prices competitive, even as costs of meat and other foods climb.
Fourth-quarter highlights
The company delivers strong holiday results globally. Total revenue was $152.9 billion, up 0.5%, negatively affected by $10.2 billion due to divestitures.
“We had another strong quarter to finish off a strong year. We have momentum in our business in all three segments. We’re being aggressive with our plans and executing the strategy. It’s exciting to see how the teams are simultaneously navigating today’s challenges and reshaping our business.” Doug McMillon President and CEO, Walmart.
Strong sales in Walmart U.S. with market share gains in grocery. eCommerce sales grew 1% and 70% on a two-year stack. Competitive pricing remains in focus globally. Consolidated
gross profit rate up 10 bps; 54 bps in Walmart U.S.
Sam’s Club comp sales increased 10.4%, and 21.2% on a two-year stack. Membership income increased by 9.1%.
Walmart International’s net sales were $27.0 billion, a decrease of $7.9 billion, or 22.6%, negatively affected by $10.1 billion due to divestitures. China, Mexico, and Flipkart delivered strong growth.
Navigated higher supply chain costs and pandemic-related challenges well, while executing strategic initiatives.
Consolidated operating expenses as a percentage of net sales were relatively flat.
Consolidated operating income was $5.9 billion, an increase of 7.3%. Adjusted operating income increased 5.9%. Both were negatively affected by about 60 basis points due to divestitures.
The company prioritizes in-stock levels. Inventory up 26% globally; 28% in the U.S., affected by higher cost of goods, mix, and higher in-transit shipments.
What’s Next
Walmart is chasing new revenue streams, as it looks beyond retail. CEO Doug McMillon said those younger businesses, such as advertising, its third-party marketplace, and online grocery delivery, are gaining momentum.
Biggs said the company’s supply chain costs were $400 million higher in the quarter than planned. As omicron peaked, Covid leave costs rose $300 million higher than expected, he said.
Walmart recently announced that its paid Covid leave will end March 31, except as required by state or local mandates. Biggs said some of the retailer’s supply chain challenges and costs will persist into the first half of the year.
