Walmart Dips 2.9% Premarket on Disappointing Earnings Estimates

Walmart missed analysts’ expectations for 2024 fiscal earnings amid economic uncertainty.

Walmart’s shares are down 3.5% in premarket trading Tuesday after the company delivered earnings forecast for fiscal 2024 that missed analysts’ expectations, citing economic uncertainty. The company expects fiscal 2024 earnings to range between $5.90 and $6.05 per share, while analysts were looking for $6.50 per share.

Walmart Voices Concerns Over Economic Uncertainty

Walmart issued a worse-than-expected full-year earnings forecast on Tuesday, sending its shares down 3.5% in premarket trading. The largest US retailer said the tepid forecast came due to caution about the economic outlook for 2023 and concerns that consumers will keep buying low-cost items, which could continue pressuring its margins.

Walmart, the largest company in the world by revenue, has been leveraging its market power to secure advantageous prices from its suppliers, allowing it to dominate the retail market and beat rivals such as Target. But lower prices, discounts, less optimistic consumer sentiment, and higher wages are likely to weigh on Walmart’s margins in the coming months.

“There’s still a lot of trepidation and uncertainty with the economic outlook. Balance sheets are continuing to get thinner, savings rate is roughly half of what it was at a pre-pandemic level and we’ve not been in a situation like this where the Fed is raising at the rate that it does.”

– said Walmart CFO John David Rainey.

The retailer now expects fiscal 2024 earnings in the range of $5.90 to $6.05 per share, missing the consensus estimates of $6.50 per share, according to Refinitiv. The company noted that its consolidated gross profit rate fell 83 basis points during the holiday quarter amid markdowns and sales of low-margin products.

On a more positive note, Walmart reported robust demand in the quarter that ended Jan. 31, generating a total revenue of $164.05 billion, up 7.3% year-over-year. This compares to analysts’ expectations of $159.76 billion. Attributable net income increased 76.2% in the quarter to $6.28 billion, thanks to unrealized gains in equity and other investments.

Walmart 2022 Woes Persist

Walmart’s weaker-than-anticipated forecast for fiscal 2024 marks the latest in a series of blows the company took over the past year amid record-high inflation and supply chain constraints. These issues resulted in excess inventory in 2022 as the company had significantly more supplies on hand relative to consumer demand.

However, these headwinds have weakened recently as inflationary pressures cooled down following the Federal Reserve’s jumbo interest rate hikes.

Earlier this month, Walmart filed for several web3 and non-fungible token (NFT) trademarks through its Sam’s Club subsidiary, marking a rare foray into digital assets by the company. Sam’s Club is a chain of membership-only retail warehouse clubs named after Walmart founder Sam Walton.

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Originally Posted February 21, 2023 – Walmart Dips 2.9% Premarket on Disappointing Earnings Estimates

Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.