Walmart (WMT.US) stock plunged nearly 9% on Tuesday after a major US retailer recorded disappointing quarterly earnings and lowered its full-year financial outlook as rising prices of food, fuel and wages had a negative impact on the company's profits.
- Company earned $1.30 per share, falling 23% from the same period last year and well below analysts’ estimates of $1.48 cents as surging inflation offset the positive impact of higher sales;
- Revenue of $141.57 billion represents 2% increase from last year and topped analysts' estimates of $138.88 billion;
- "Bottom-line results were unexpected and reflect the unusual environment," Walmart CEO Doug McMillon said in a news release. "US inflation levels, particularly in food and fuel, created more pressure" than the company predicted;
- Despite higher prices, consumers are still spending, which was shown by today's US retail sales figures. US same-store sales rose 3% from last year, in-line with Wall Street estimates. However some analysts believe that Walmart was lifting prices too slow, which negatively affected profits;
- Company noticed that inflation affected shoppers' buying patterns. Rising number of clients moved towards private-label food brands — particularly in meat, deli items and dairy products and ditched discretionary items, the company said.
- Walmart, which normally benefits from a "value shift" in consumer sentiment given the lower price points of both its consumable and discretionary offerings, said higher-margin e-commerce sales were up only 1% from last year, but 38% on a so-called 'two year stack'.
- Walmart increased sales guidance for the year, but lowers profit expectations. In February company expected profit increase in the region of 3% this year, while currently company forecasts a 1% decrease. Net sales is expected to increase by around 4%, a 100 basis point boost compared to February forecasts.
- Walmart, America's largest retailer and employer, is treated by many analysts as an economic bellwether. Recent figures showed that inflation is affecting not only the tech sector but even retail behemoths like Amazon and Walmart. If current macroeconomic conditions do not improve soon, many of these cost pressures could remain a drag on profitability throughout the year.
Walmart (WMT.US) stock launched today's session with a massive bearish price gap and is heading towards local support at $132.50, where lows from February 2022 are located. The nearest resistance is located at $138.35 which coincides with 38.2% Fibonacci retracement of the upward wave launched in March 2020. Source: xStation5
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appThe content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
