(New York) Three weeks after issuing a profit warning that had shaken the American stock market, the American supermarket giant Walmart presented solid quarterly figures on Tuesday, boosted in part by inflation, and reassured Wall Street on its prospects .
Updated yesterday at 10:49 am
The group said it expected its operating profit to decline by 9% to 11% for the 2023 financial year, less than the 11% to 13% forecast so far.
In the second quarter of its staggered fiscal year, the Bentonville (Arkansas) company achieved a turnover of 152.9 billion dollars, up 8.4% year on year and above market expectations.
The New York market reacted positively to these results, with Walmart’s stock climbing nearly 6% at the start of the session.
“We are pleased that more customers are choosing Walmart in this time of inflation and we are working hard to support them as they watch their spending,” Walmart chief Doug McMillon said in a statement.
The group announced in late July that its profits would be eroded as customers spend more on food and gasoline due to inflation and less on other goods.
This situation pushes Walmart to offer reductions on other products, with higher margins, to be able to sell its stocks. The overall amount of the company’s inventories was, however, at the end of July, more than 25% higher than that of the previous year.
Walmart chief financial officer John David Rainey said in a phone call with Wall Street analysts on Tuesday that the group had “cancelled billions of dollars in orders to help bring inventory levels in line with expected demand.
Mr. Rainey also recognized a change in consumption habits linked to inflation with an increasingly marked choice for less expensive items within the same range of products, particularly in food.
“For example, instead of higher priced deli meats, customers are increasing their purchases of hot dogs as well as canned tuna or chicken,” he noted.
“Headwinds”
Walmart’s same-store sales (excluding fuel prices) increased 6.5% in the quarter. The group estimates that they will increase by 3% over the whole of the second half of 2022.
Its quarterly net profit was $5.1 billion (+20.4%).
GlobalData’s Neil Saunders says Walmart’s better-than-expected quarter shouldn’t mask deep-seated issues, as evidenced by the group’s 6.8% decline in operating profit, an indicator that helps gauge intrinsic performance from a company.
“All divisions are affected by several headwinds, starting with the decline in the value and volume of sales of higher-margin merchandise, including home products, apparel and technology products,” the analyst said. .
Walmart’s difficulties in selling its products other than food are due to three main factors, explains Mr. Saunders: inflation which weighs on purchasing power, excessive inventories and the difficulty of attracting new customers to consumer goods.
One of the options explored by the American giant is to strengthen its offer outside its stores. This is the meaning of a partnership announced Monday that offers customers of the Walmart Plus loyalty program access to Paramount Global’s video-on-demand service.
However, recalls Mr. Saunders, “these secondary activities are much more embryonic than those of Amazon. Walmart cannot currently rely on them as much to make up for its weaknesses in retail. »