Walmart Reports Earnings, Choiceful Consumer, and Cautious Fiscal 2024 Guidance

Walmart forecasts 2 - 2.5% constant currency US sales growth full calendar year 2023 and 2022 has reported solid growth overall: consumer is still buying, but they are discerning.

Second-half growth guidance a concern

Q4 2022 Earnings:

* Total Revenue hit $164.0 billion,up 7.3% y/y

* Consolidated operating income was $5.6 billion or 3.4% net operating income, down 5.5% y/y

* Walmart U.S. comp sales grew 8.3% y/y [Walmart is one of the only people who report comp sales]

* US eCommerce growth was 17%

* Gained grocery marketshare

* 41% growth at US Walmart Connect (Advertising)

Fiscal Year 2023 (calendar 2022) Earnings:

* Total revenue was $611.3 billion, up 6.7%,

* Consolidated operating income $20.4B, or 3.37% net operating income, down 20% y/y

* Walmart U.S. comp sales increased 6.6%

* Walmart U.S. eCommerce sales grew 12%, up to a $80B business now (unclear 1P/3P mix - keep in mind Amazon 1P GMV is $220B and Shopify GMV is now $197B)

* Global advertising business grew nearly 30% to reach $2.7 billion.

(Amazon ads business $37.7B growing 23% - wonder where your retail media opportunity is????)

Fiscal 2024 Guidance:

* Forecast 3% constant currency sales growth overall, 2-2.5% in the US.

* Consolidated operating income expected to increase 3% constant currency

* Both Opex and Capex expected to be flat/slightly up

* Cautious outlook due to unknowns / possible changes in consumer spending, layoffs, household income, and recession risk.

* Operating income growth will outpace sales growth in second half of the year

Inflation and Consumer Sentiment:

* Management consensus term for consumer behavior was “choiceful/discerning.”

* Private label accelerated in Q4, on top of already meaningful acceleration throughout 2022.

* Food inflation is the most stubborn: dry grocery/consumables are mid-double digits and this “will be with us for a while” which I took to mean calendar 2023.

* General merchandise and other prices have come down more, including some perishable grocery like milk/beef.

* Expects wage increases are mostly done

Other Tidbits:

* There are now 400M SKUs on the marketplace (No GMV breakout)

* Walmart US December = largest sales month in WMT US history