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Walmart rang up record sales in the fourth quarter but warned of slower growth this year, sending its shares down sharply in early trading on Thursday.
The world’s biggest retailer reported full-year revenue of $681bn, the highest of any company worldwide and up by 5.1 per cent, or $32.9bn, from the year before. Operating income rose 8.6 per cent, near the lower end of management’s previous guidance.
For the current fiscal year, Walmart predicted a rise of 3 to 4 per cent in net sales and 3.5 to 5.5 per cent in adjusted operating profit in newly published guidance, a deceleration from last year if realised.
Wall Street had been expecting revenue growth of 4.2 per cent, according to a survey of analysts by Visible Alpha. Walmart said the lower profit guidance in part reflected the costs related to its purchase of Vizio, a connected television company, last year.
Shares fell 8.6 per cent in pre-market trading.
For the fourth quarter, Walmart said same-store sales rose 4.6 per cent at its namesake US outlets, beating Wall Street expectations by 0.1 percentage point. Sales in the quarter, which ended in January, were stronger than the overall rise in US retail sales during the holiday shopping season.
Global revenue in the quarter increased 4.1 per cent to a record $180.6bn, slightly more than the consensus estimate of $180.4bn, according to analysts polled by Visible Alpha. Net income of $5.3bn was down 4.4 per cent from a year ago but beat the consensus forecast of $5.2bn.
The Arkansas-based company’s quarterly revenue fell short of rival Amazon’s for the first time. The ecommerce group earlier this month reported that fourth-quarter revenue rose 10 per cent year on year to $187.8bn. Amazon’s revenue includes its cloud computing business.
Walmart, once seen as endangered by Amazon, flourished in the past year. It grabbed business from other brick-and-mortar chains, built up its online order and delivery presence and expanded in profitable niches such as sales of advertising to its suppliers, memberships to its customers and shipping services for third-party merchants.
“We have momentum driven by our low prices, a growing assortment, and an ecommerce business driven by faster delivery times,” chief executive Doug McMillon said in a statement on Thursday.
Walmart’s shares soared by 82 per cent in the year to Wednesday as it repeatedly raised guidance for sales and profits. The company’s reputation for rock-bottom prices has attracted consumers amid stubborn US inflation.
Executives have said that its ecommerce business, which includes online orders from its inventory and a Walmart-run third-party marketplace, has drawn higher-income US households as interested in convenience as low prices.
Walmart has been able to boost profit margins with businesses such as sales of advertising to its vendors, a business that grew by 29 per cent in the quarter.
Walmart’s ecommerce sales rose 16 per cent year on year, slower than in previous quarters. The company said the rate of growth was hit by the timing of an annual sales event at its Flipkart subsidiary in India, which took place in the third quarter last year.
