Walmart Fiscal 2Q23 Commentary

Jul 26, 2022 | Bubble Monitor

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Executive Summary What does a recession look like? Walmart’s preannouncement for fiscal 2Q23 results looks just like that. Here we see a sharp hike in inflation pressuring consumer spending and adding to Walmart’s costs such that the retail giant’s earnings are tanking even while its sales increase. This reveals that Walmart is not able to fully pass along its higher costs to its cash-strapped customers. If this is bad news for Walmart, just consider how bad the macro-economic impact will be on smaller competitors who are losing market share to this massive low-cost provider.
Stock action WMT shares plummeted -8% on 7/25/22 after reporting preliminary fiscal 2Q23 results. For the YTD period ending 7/26/22, the stock is down -16% as consumer weakness mounts.
Sales Walmart expects 2Q sales to increase +7.5% which is higher than its original guidance of +5%. This includes an expected +6% same-store sales increase. Higher sales reflect higher prices for food and fuel (inflation) partially offset by substantial discounts for apparel.
Profits Adjusted EPS is now expected to decline by -8% to -9% during 2Q vs previous guidance of flat to up slightly. This reflects not just higher costs, but a substantial markdown of its apparel inventory with consumers apparently substituting the purchase of clothes for necessities like food and gas. At least Walmart is gaining market share in groceries as the industry’s low-cost provider.

Walmart Financials Chart

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