Walmart yesterday said that its Q1 total revenue was $152.3 billion, up 7.6 percent compared to the same period a year ago, on US same-store sales that were up 7.4 percent and e-commerce sales that were up a whopping 27 percent compared to same period a year ago.
The retailer also said that its Q1 operating income was $900 million, up 17.3 percent from a year ago.
One other critical note: Walmart’s Q1 advertising business was up more than 30 percent.
Some media analysis:
• The New York Times: “Higher-income households and younger customers are shopping more at Walmart, the company said, reflecting a trend that its executives have called out in recent quarters as Americans face higher-than-usual inflation. The retailer said it had also gained market share in the grocery category.”
• The Wall Street Journal: “Executives said the performance doesn’t mean shoppers are flush with cash. Sales slowed as the first quarter progressed, said Walmart Chief Financial Officer John David Rainey in an interview, as people dealt with cuts to SNAP benefits and tax refunds shrank. A pandemic-era boost in food assistance payments to low-income households ended earlier this year.
“Shoppers continued to gravitate to smaller package sizes and store brands to manage their spending, he said. Though inflation has cooled in recent months, eating into sales in the quarter compared with last year, food prices are up around 20% compared with two years ago, Rainey said.”
• From the Associated Press: “The retail sector has been under strain as millions of shoppers shift from buying clothing and home furnishings, to necessities. Walmart, however, said it’s seen easing costs in its supply chain and freight from last year, which will improve margins.
“General merchandise costs are now lower than a year ago in the U.S., McMillon said, but they’re still higher than two years ago. In grocery and consumable categories like paper products, Walmart is still seeing high single digit to low double digit inflation in the cost of goods.
“‘The persistently high rates of inflation in these categories, lasting for such a long period of time, are weighing on some of the families we serve,’ McMillon said.
“The cumulative effect of stubborn inflation will create more uncertainty in the second half of the year, McMillon said, adding that the company is working with suppliers to bring costs down.”
KC’s View:
To me, the two most interesting numbers are the advertising and e-commerce increases. The first one makes the point that Walmart is continuing to drive new revenue streams that it can use to support its low price proposition, which clearly is resonating with shoppers.
The second one underlines the fact that e-commerce continues to be a vital factor in the retail sector; there was some backsliding in the waning days of the pandemic as people yearned to get out, and some projections that tough economic times would erode e-commerce sales. But that doesn’t seem to be the case at Walmart. Competitors should take note.
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