Walmart Q3 FY2023 Earnings: Share Gains + Expense Discipline = Sector Bellweather

Walmart Q3 FY2023 Earnings: Share Gains + Expense Discipline = Sector Bellweather

A few highlights:

* eCommerce is up 16%, solid. Overall US 8.2% comp sales growth, improving AOV and # transactions.

* Walmart Connect US Advertising up 40% y/y

* 4.8% operating income, solid and steady.

* EPS miss due to JD investment

* global inventory levels are up 12.4% for WMT US for the quarter, significantly down from earlier this year. a lot of this is inflation, not units.

* depth of inventory decision is particularly critical at the moment (my friends in inventory planning will be busy!)

* All WMT US Mkpl customers will be automatically given self-service ad accounts. 8k sellers added in Q3.

* private brands in grocery increased 130bps as some even high-value consumers traded down.

* Walmart Mexico 30% of transactions use fulfillment services (I think for marketplace)

* Q4 guidance staying the same, but adding Q3 surprise/beat.

And a few of my comments:

1 - How happy is WMT that they divested ASDA in 2021? Limited European exposure makes Intl look great.

2 - JD China exposure is troublesome and a huge drain. ($1.11 per share loss!)

3 - Retail is a category-by-category dogfight at the moment. There are places to be aggressive and places to be cautious. A balanced four-quadrant approach to planning is needed.

4 - Smart move to give all marketplace merchants ad accounts. Any scaled marketplace without an ad business is missing out.

5 - Walmart is a great operator that understands its business.

Comp sales growth 5.5% for the rest of the year, operating income decline ~7%

6 - Most of the inventory is in stores, not in supply chains at this point.

7 - Sams Club continues to crush it. 11 quarters of double-digit comp sales growth.

8 - Troubled categories are in general merchandise: apparel, electronics, and home. Offset by gains in consumables and groceries.

Category matters at the moment. Walmart continues to gain share.

Rick Watson

Rick Watson founded RMW Commerce Consulting after spending 20+ years as a technology entrepreneur and operator exclusively in the eCommerce industry with companies like ChannelAdvisor, BarnesandNoble.com, Merchantry, and Pitney Bowes.

Watson’s work today is centered on supporting investors and management teams incubating and growing direct-to-consumer businesses. Most recently, in partnership with WHP Global, Rick was a critical resource in architecting the WHP+ platform, a new turnkey direct to consumer digital e-commerce platform that powers AnneKlein.com and JosephAbboud.com.

Watson also hosts a weekly podcast, Watson Weekly, where he shares an unbiased, unfiltered expert take on the retail sector’s biggest players.

In the past year alone, Rick has spoken at many in-person and virtual events as well as podcasts on topics ranging from retail/ecom to supply chain/logistics and even digital grocery including CommerceNext IRL, ASCM Connect, and Retail Innovation Conference.

https://www.rmwcommerce.com/
Previous
Previous

Target Q3 2022 Earnings: It's Ugly Out There.

Next
Next

Target's New Larger Format Stores a Challenge to Walmart, If The Economy Holds Up