Walmart Inc.’s profit forecast for this year fell short of analyst estimates, signaling a cautious outlook for the world’s largest retailer after a 2022 performance that was marred by an inventory surge.
(Bloomberg) — Walmart Inc.’s profit forecast for this year fell short of analyst estimates, signaling a cautious outlook for the world’s largest retailer after a 2022 performance that was marred by an inventory surge.
Adjusted earnings will decline by as much as 6.2% in the current fiscal year, to a range of $5.90 to $6.05 a share, Walmart said in a statement Tuesday as it reported financial results. The outlook includes an accounting impact of 14 cents a share from last-in, first-out accounting provisions. Wall Street had estimated a gain of about 3.8% to $6.53.
That would be the second straight annual profit decline. Fiscal 2023 adjusted earnings fell to $6.29, the first full-year decline for the profit measure in six years.
The outlook points to a slow rebound from the missteps of last year, when Walmart misjudged a shift in demand away from general merchandise such as apparel and home goods as inflation pinched US consumers. At the same time, the retailer has benefited from robust grocery sales and a jump in purchases by higher-income shoppers looking for bargains.
“We feel good about how the core business is operating, but we’re being cautious with the macroeconomic outlook,” Chief Financial Officer John David Rainey said in an interview. “There’s a lot of unpredictability around what’s happening, what will be the effect of Fed tightening on the consumer balance sheet, what is the effect of the declining savings rate.”
Walmart shares fell 4.3% ahead of regular trading in New York. The shares climbed 3.3% this year through Feb. 17, while the S&P 500 index advanced 6.2%. Walmart outperformed the S&P 500 and major retail indexes last year.
At US Walmart stores, comparable sales excluding fuel will gain 2% to 2.5% during the current fiscal year, which ends in early 2024, Bentonville, Arkansas-based Walmart said. That trails the 3.1% average of analyst estimates compiled by Bloomberg.
In last year’s fiscal fourth quarter, which ended Jan. 31, adjusted earnings came in at $1.71 a share. Analysts had projected $1.52. Sales rose 7.3% to $164 billion, compared with the average estimate of $159.6 billion.
Walmart’s leaders are scheduled to discuss the company’s fourth-quarter results and outlook for this year on a conference call at 8 a.m. New York time.
(Updates with additional details starting in third paragraph.)
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