Walmart tops expectations but cautious on guidance

Walmart on Tuesday reported strong sales during the holiday season as budget-conscious consumers looking for better deals on groceries and other items flocked to its stores.

The report was a good showing for the company, considering consumers had cut back on their overall spending during the traditional November-December shopping period. Sales rebounded at stores and restaurants last month, showing shoppers are still spending despite higher prices and several interest rate hikes by the Federal Reserve in an effort to curb the problem.

The nation’s largest retailer also delivered full-year sales of $611.3 billion, up 6.7% compared to the prior year. But it gave cautious guidance for the next fiscal year, saying it expects sales to increase between 2.5% to 3% and U.S. sales to jump 2% to 2.5%.

And it forecast adjusted earnings per share ranging from $5.90 to $6.05, excluding fuel.

Analysts surveyed by FactSet forecast $6.52 per share, on average.

Also on Tuesday, Home Depot posted strong profits in its final quarter of 2022, but a muted outlook for this year sank its shares before markets opened. Amazon, which reported strong fourth quarter sales earlier this month, has also warned about a slower growth period for the coming months.

Walmart executives told analysts on a call that their guidance reflects the unknowns in the economy as consumers face rising interest rates, delinquencies and are putting less money in their savings.

“While the supply chain issues have largely abated, prices are still high and there is considerable pressure on the consumer,” said Chief Financial Officer John David Rainey on the call.

Rainey said the company’s earnings projections are also based on other factors, such as expenses from more interest payments and its planned buyouts of South African retailer Massmart and the robotics firm Alert Innovation.