Before the U.S. stock market opened on February 21, the retail giant Wal-Mart announced its performance report for the fourth quarter of fiscal year 2023 ending in January. There are many remarkable things in the financial report, but the profit ushered in the first decline in six years, and the profit guidance for the new fiscal year is also much lower than expected. It can be said that it is mixed.
1. Remarkable performance in Q4
In terms of revenue: In this quarter, the company achieved revenue of US$164.048 billion, which was US$152.871 billion in the same period last year, an increase of 7.3% year-on-year, and 2.68% higher than the market expectation of US$159.1 billion. Wal-Mart, as a leader in the consumer field, The higher-than-expected revenue also reflects to a certain extent that global consumption is picking up.
In terms of profit: In this quarter, the company realized a gross profit of 37.567 billion US dollars, which was 37.349 billion yuan in the same period last year, a year-on-year increase of 0.58%, and a gross profit rate of 22.9% in the same period. In this quarter, it recorded a net profit of 6.275 billion US dollars (much higher than market expectations), compared with 3.562 billion US dollars in the same period last year, a year-on-year increase of 76.17%, and a net profit of 3.8% in the same period.
Profit and revenue rose in the fourth quarter even as inflation weighed on holiday sales.
2. Inflation slows down and consumption recovers
Inflation in the United States has been at a historically high level in 2022. Therefore, Wal-Mart’s Q4 financial report is an important clue to track the consumption situation in the United States. As the investigators analyzed above, Wal-Mart’s financial report has actually exceeded expectations, which also reflects to a certain extent. The domestic consumer demand in the United States is gradually releasing the trend.
According to the financial report, in this quarter, Wal-Mart US achieved revenue of US$113.744 billion, a year-on-year increase of 8.0%, Wal-Mart International achieved revenue of US$27.575 billion, a year-on-year increase of 2.1%, and Sam’s Club achieved revenue of US$21.424 billion, a year-on-year increase of 1.13% %. Obviously, the key to supporting this year-on-year increase in revenue is the better-than-expected performance of Wal-Mart in the United States. Although Sam’s Club has the largest year-on-year growth, it only accounts for 13.16% of total revenue, so its contribution to total revenue Still relatively limited.
Three, a single season is bright, and the fire is turned off all year round
If you only look at Q4, Wal-Mart's performance can be called the warm sun in the cold wind and the coke in the heavy snow, but if you look at the entire fiscal year, it is another matter. From the perspective of the full fiscal year, Wal-Mart achieved a total revenue of US$611.289 billion, which was US$572.754 billion in the same period last year, an increase of 6.7% year-on-year, and a net profit of US$11.680 billion, which was US$13.640 billion in the same period last year, a year-on-year decrease of 14.6%.
The net profit margin in fiscal year 2023 is 1.91%, which is the first time since fiscal year 2020 that it has fallen below 2%, but it also reached a historical high of 2.86% in fiscal year 2020, and it has not been as good as a year after that. Although Wal-Mart's revenue continues to grow, it has fallen into an embarrassing situation of increasing revenue but not increasing profits.
4. Future outlook, slightly conservative
In terms of performance guidance for Q1 and the full fiscal year in fiscal year 2024, Wal-Mart's expectations seem a bit too conservative.
In the performance guidance of Q1 in fiscal year 2024, net sales will increase by 4.5% to 5% year-on-year, operating profit will increase by 3.5% to 4% year-on-year, and adjusted earnings per share will be between US$1.25 and US$1.25. Between $1.3.
Looking at the full fiscal year of 2024, without considering exchange rate changes, the growth rate of net sales will be 2.5% to 3%, which is lower than the market expectation of 3.1%, and the growth rate of operating profit will be around 3%. Post-EPS ranged from $5.9 to $6.05, missing consensus estimates of $6.53.
The performance guidance given by Wal-Mart is still too conservative. Considering that domestic inflation in the United States has eased, the impact on Wal-Mart's performance is still real. In fact, Wal-Mart has thrown out a relatively low expectation, which is easier to achieve, and will also bring the possibility of exceeding expectations to the market. It can only be said that Wal-Mart is worthy of being a capital veteran, and this trick is very slippery.
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