Walmart shares hit record high after strong forecast
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The news: Shares in Walmart surged to a record high after the US retail giant reported better-than-expected quarterly results and raised its full-year forecast.
The numbers: Total US comparable sales rose 3.9% in the first quarter ended 30 April, beating analyst estimates of 3.15% growth. First-quarter adjusted earnings of USD0.60 ($0.89) per share also easily beat the 52-cent average forecast.
For the fiscal year ending January 2025, Walmart expects sales to rise slightly above its prior forecast of 3% to 4% growth, and adjusted profit per share to be slightly above its USD2.23 to USD2.37 estimate
The news sent Walmart shares up 7% to an all-time high of USD64.22, marking their biggest single-day gain in four years and helping lift the Dow Jones index past 40,000 for the first time.
The context: Some US retailers in recent weeks have fanned concerns that consumer spending is waning, but Walmart is betting that easing inflation will drive stronger sales of groceries and non-essential merchandise like clothing and electronics.
CEO Doug McMillon said the results were driven by more visits to stores and the website by wealthier shoppers and the price gaps it is maintaining against rivals, and the largest US retailer sounded uniformly positive in its outlook.
Walmart executives said that lower-income consumers maintained their spending habits in the quarter but tended to prioritise less-expensive items. They also noted that the price gap between eating at home and dining outside had increased, boosting its grocery business, which accounts for about 60% of total revenues.
The sources: Walmart earnings release, Reuters
