Walmart saw 25% growth in ecommerce in Q1, as the beast of Bentonville outpaced expectations on the top and bottom line and raised its full-year guidance, three months after warning that the 2023 outlook was not a particularly good one based on consumer sentiment and macros economic signals.
Overall revenue for Walmart in Q1 was $152.3 billion, up 7.7% from 2022 and up significantly from the Refinitiv consensus estimate of $148.8 billion, while earnings per share was $1.47, vs. the consensus figure of $1.32.
Advertising, another strong area for Walmart as retail media becomes a profit center for many, grew 30% globally in Q1, and 40% in the U.S.
CEO Doug McMillon told analysts on the earnings call that Walmart was especially strong in grocery during the quarter. He said the company gained market share and saw a continuing trend of signing up both higher-income and younger shoppers to its Walmart+ loyalty program, as both groups sought shelter from nagging inflation.
Giving a snapshot into unit economics and pricing strategy, McMillon said while inflation pressure has eased for general merchandise, it has remained stubbornly high for dry groceries and consumables, with high single to low double-digit growth. In reaction, he said Walmart worked with those suppliers to reduce costs in order to drive unit volume, in an effort to free up consumer budgets to spend more on discretionary items.
“That’s what we’re focused on, have been focused on, and it’s just taking longer in those categories than we want,” McMillon said.
On the operations front, executives said supply chain and transportation costs have come down as capacity has increased, helping boost margins. Automation investments continue throughout the business, including MFCs with automated storage and retrieval (AS/RS) systems and EVs for last-mile delivery. This has also helped boost in-stock availability at stores for fulfilling online orders, especially for Walmart+ members.
Walmart U.S. president John Furner was asked about the growing issue of inventory theft or shrinkage, which has been rampant across retail, including brazen daylight grabs at city stores and organized rings. Target CEO Brian Cornell said in its Q1 earnings release the company expects to lose up to $500 million more from theft this year than in 2022; some incidents are turning violent. That figure was $800 million, according to the New York Post, for a staggering total of $1.3 billion.
After saying Walmart was doing all it could to reduce shrinkage, protecting customers, associates and inventory, Furner said it’s really a collective effort.
“We know a lot of communities have been affected by this, but it’s also important to note that retail can’t solve this issue all on its own,” he said. “It will take communities stepping up and enforcing the law to be able to bring this issue back under control.”
Furner said Walmart’s fulfillment service offered to marketplace sellers, launched in early 2020 as a competitor to Fulfillment By Amazon, has seen strong growth. He said it’s also nicely complemented the company’s advertising business. When more sellers use it, Furner said, they’re able to deliver a higher percentage of orders in one or two days, increasing conversion rates and also fueling more media sales.
“This ability that the team has developed for sellers and suppliers to reach groups of customers that are targeted is really improving and I think that’s definitely driving the results there,” Furner said.
Walmart said its marketplace continues to grow as well, with over 400 million SKUs and a 40% increase in sellers in Q1.
The post Walmart Q1 Beats on Several Scores appeared first on Multichannel Merchant.
0 Commentaires