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Walmart Q4 revenue soars, boosted by strength in web sales during COVID-19; stock drops

Julia La Roche
·4 min read
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Walmart (WMT), the world’s largest retailer, reported stronger-than-expected fourth-quarter revenue and sales results, driven by strong e-commerce growth that spiked during the COVID-19 pandemic.

However, the company's stock dropped as investors digested Walmart's warning about potentially weaker sales in the coming year, as well as the costs associated with a pay hike for its frontline workers.

Here are the results versus the estimates, according to Bloomberg:

  • Adjusted EPS: $1.39 v. $1.50 estimate

  • Revenue: $152.1 billion billion v. $148.39 billion

  • Walmart U.S. comp-store sales (excluding gas): 8.6% v. 5% estimates

  • Walmart U.S. e-commerce sales: 69%

During the fiscal 2021 year, Walmart reported total revenue of $559.2 billion, up $35.2 billion, or 6.7% from a year ago. For the quarter, the closely-followed same-store sales figure came in at 8.6% in the U.S., versus estimates of 5% growth. Sales were spurred by the continued boom in electronic commerce, which grew 69% from a year ago in the quarter.

The closely-followed same-store sales figure came in at 8.6%, ahead of expectations on a "robust" holiday season and an uptick in January because of the stimulus checks. In the U.S., transactions declined 10.9% in the quarter as customers made fewer trips, while the average ticket jumped 21.9% as shoppers stocked up during those visits.

In terms of merchandise, grocery sales posted high single-digit comparables, as stores increased their hours and saw better in-stocks. Food sales were strong across categories, while household chemicals and paper products continued to show strengths. Walmart's grocery pickup and delivery saw record-high sales volumes again in the quarter as customers shift toward e-commerce options.

The pharmacy also saw its comp sales growth in the mid-single digits, while general merchandise posted low double-digit growth. The general merchandise category performance benefitted from customers looking for comfort, leisure, and recreation across electronics, sporting goods, toys, and outdoor living. Walmart said stimulus spending benefitted its January sales.

In its fiscal 2022 full-year guidance, Walmart said it expects U.S. same-store sales, excluding gas, to grow in the low-single digits. It also expects consolidated net sales growth to be up in the low single-digits.

“Assumptions in the guidance are dependent upon the duration and intensity of the COVID-19 health crisis globally, timing and effectiveness of global vaccines, the scale and duration of economic stimulus, employment trends and consumer confidence,” Walmart noted.

At the Investment Community Meeting on Thursday, CFO Brett Biggs said he expects the FY22 quarterly profit growth cadence versus the prior year “to be quite variable,” citing COVID-19-related expense and profit timing as well as international transactions.

The CFO said the retailer expects its Q1 operating income “to be relatively flat to last year, and EPS to be flat to slightly up," reflecting the presence of Asda in its financials for about half the quarter, and some tax rate fluctuations. Due to the timing of FY21 costs and divestitures, Q2 and Q3 operating income and EPS may be down mid to high single digits, with Q4 operating income and EPS potentially up mid to high single digits, Biggs added.

“Again, and I probably can't stress this enough, we’re in a very unusual time, causing projections even in the short-term to be very challenging and open to significant fluctuation,” Biggs said.

The retail giant also announced pay increases for approximately 28% of its hourly store associates. The average U.S. wage is now above $15 per hour.

Walmart associates "stepped up to serve our customers and members exceptionally well during a busy holiday period in the midst of a pandemic. Change in retail accelerated in 2020. The capabilities we’ve built in previous years put us ahead, and we’re going to stay ahead," Walmart CEO Doug McMillon said in a statement in the retailer’s fourth-quarter earnings results.

Walmart is the nation's largest private employer with 1.5 million associates. In September, the retailer boosted wages for 165,000 of its workers.

However, shares of Walmart tumbled 4.5% in the pre-market session, down from Wednesday's close at $147.50.

Julia La Roche is a correspondent for Yahoo Finance. Follow her on Twitter.