Walmart Slips To Loss In Q3, But Results Top Estimates

(RTTNews) - Retail giant Walmart Inc. (WMT) reported Tuesday a loss for the third quarter compared to a profit last year, despite strong revenue growth, hurt by hefty $3.3 billion charges related to opioid legal settlements. However, adjusted earnings per share and quarterly revenues topped analysts' expectations. The retailer also raised its adjusted earnings guidance for the full-year 2022 on strong third-quarter results.

In pre-market activity on the NYSE, Walmart shares are surging $9.96 or 7.20 percent to trade at $148.35.

"We had a good quarter with strong top-line growth globally led by Walmart and Sam's Club U.S., along with Flipkart and Walmex. Walmart U.S. continued to gain market share in grocery, helped by unit growth in our food business," said Doug McMillon, President and CEO.

For the third quarter, the company posted a net loss attributable to Walmart of $1.80 billion or $0.66 per share, compared to net income of $3.11 billion or $1.11 per share in the prior-year quarter.

Results for the latest quarter include $1.11 per share of unrealized losses on equity and other investments and $1.05 per share of charges related to opioid legal settlements.

Excluding items, adjusted earnings for the quarter were $1.50 per share, compared to $1.45 per share in the year-ago quarter.

On average, 29 analysts polled by Thomson Reuters expected the company to report earnings of $1.32 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter, comprising net sales and membership and other income, grew 8.7 percent to $152.81 billion from $140.53 billion in the same quarter last year, with strength across segments. Revenues increased 9.8 percent to $154.30 billion in constant currency. Analysts were looking for revenues of $147.75 billion for the quarter.

Net sales grew 8.8 percent to $151.47 billion, and Membership and other income increased 2.0 percent to $1.34 billion from last year. Consolidated U.S. comp sales, without fuel, increased 8.5 percent.

Walmart U.S. comp sales increased 8.2 percent and net sales rose 8.5 percent to $104.78 billion. Walmart U.S. eCommerce sales grew 16 percent.

Sam's Club comp sales increased 10.0 percent and net sales also grew 12.8 percent to $21.40 billion from last year. Membership income increased 8.0 percent.

Net sales at Walmart International improved 7.1 percent to $25.30 billion, and also increased 13.3 percent to $26.77 billion in constant currency.

Consolidated gross profit rate decreased 89 basis points, primarily due to markdowns and mix of sales in the U.S., an inflation-related LIFO charge at Sam's Club, and the timing of Flipkart's annual event, The Big Billion Days.

Consolidated operating expenses as a percentage of net sales increased 144 basis points, due to charges of $3.3 billion related to opioid legal settlements.

Subsequent to the third quarter the Company approved a new $20 billion share repurchase authorization replacing its existing authorization, which had approximately $1.9 billion remaining at the end of the third quarter.

Looking ahead the fourth quarter, the company now expects adjusted earnings per share to decline 3 to 5 percent on consolidated net sales growth of about 3 percent, with a negative impact of about $1.3 billion from currency fluctuations. Walmart U.S. comp sales growth is expected around 3.0 percent.

Analysts are looking for earnings of $1.46 per share on revenue growth of 3.8 percent to $158.76 billion for the quarter.

For fiscal 2023, the company now projects adjusted earnings per share to decline 6 to 7 percent or 5 to 6 percent, excluding divestitures, on consolidated net sales growth of about 5.5 percent or about 6.5 percent, excluding divestitures, with a negative impact of about $4.1 billion from currency fluctuations. Walmart U.S. comp sales growth is expected at about 5.5 percent, excluding fuel.

Previously, the company expected adjusted earnings to decline about 9 to 11 percent and about 8 to 10 percent, excluding divestitures. It also expects consolidated net sales growth of about 4.5 percent in constant currency and about 5.5 percent, excluding divestitures, with Walmart U.S. comp sales growth of about 4 percent, excluding fuel.

The Street is looking for earnings of $5.88 per share on a revenue growth of 4.8 percent to $600.48 billion for the year.

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