The American and world leader in distribution is becoming more and more of a leader. Walmart’s tight pricing policy is favoring the company in a context of high inflation. Sales are exceeding forecasts not only by analysts, but also by the company itself. In the first quarter of its fiscal year (from February to April), the turnover of the American giant grew by 7.6% due to the pull not only of its hypermarkets, but also of sales on-line, which shoot up 26%. The group has raised its forecasts for the whole year.
When presenting the closing results for 2022, the company indicated that it expected to increase sales at a rate of 4.5%-5% in the first quarter of the year, but that growth for the year as a whole would be 2.5%. -3%. Now, after widely exceeding the target for the first quarter, the forecast is for sales to increase by 4% in the current quarter and by 3.5% for the year as a whole. It is a prudent calculation, after what was seen at the start of the year.
The company billed 152,301 million dollars in the first quarter (about 141,000 million euros, at the current exchange rate), with that growth of 7.6%, according to the results communicated to the Securities and Exchange Commission (SEC). The operating result grew by 17.3%, up to 6,240 million dollars. Consolidated attributable net profit, however, fell 18.5% to $1,673 million.
Walmart identified last year that it was capturing higher-income consumers who flock to its competitive prices in a context of high inflation. The company also concentrates the bulk of its business on food, which has become more expensive, but has not suffered as much in sales as other categories of goods. This has protected its billing, although food has lower margins.
Gross margin goes from 23.8% to 23.7%, a minimal decrease, since the impact of the different product mix is partly offset by the normalization of the supply chain and lower freight costs, as explained to analysts. The decrease in profit is not due so much to these lower gross margins as to the increase in the interest charge and extraordinary results. Adjusted earnings per share, excluding extraordinary investment losses, grew 13%, according to the company.
“We’ve had a good quarter,” Walmart Chairman and CEO Doug McMillon said in a statement. “Comparable sales have been strong around the world and e-commerce is up 26%. We have reduced expenses, expanded operating margin and increased profits [operativos] above sales”, he added. Walmart closed last year with a turnover of 611,289 million dollars after growing 6.7%, so it is accelerating and not slowing down its growth, as expected.
Much of the acceleration in growth is due to the evolution of sales from electronic commerce, which shot up 26% and contributed approximately 2.7 points to the group’s growth. Walmart is recovering some of the ground that Amazon has taken from it.
Walmart’s strength contrasts with the evolution of other distribution giants. Home Depot, focused on DIY and the home, expects its first drop in sales since 2009, the year after the financial crisis broke out, it announced this week. Its sales fell in the first quarter of the year by 4.2% to 37,257 million dollars.
Target, for its part, announced this week that its sales grew only 0.5% in the first quarter of this year, up to 24,498 million dollars, with comparable sales stagnating. The company combines the food business with that of clothing, accessories and home, categories where consumers have increased spending less or have reduced it.
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