Walmart Reports Strong Holiday Sales and Strategic Acquisition of Vizio for Advertising Growth

Walmart reported a 6% increase in quarterly revenue on Tuesday, buoyed by robust consumer activity during the holiday season and a substantial uptick in global e-commerce sales.

The retail behemoth disclosed its acquisition of smart TV manufacturer Vizio on the same day, a move aimed at propelling the expansion of its advertising arm. The acquisition, valued at $2.3 billion or $11.50 per share, underscores Walmart’s strategic investment in diversifying its revenue streams.

In an interview with CNBC, Chief Financial Officer John David Rainey noted that consumers exhibited discernment in their spending habits, opting for more frequent but smaller purchases. Rainey highlighted a softer demand for high-ticket items such as electronics, TVs, and computers.

Despite these challenges, Walmart sustained robust sales performance even beyond the holiday rush. The company’s quarterly earnings per share of $1.80 adjusted exceeded analysts’ expectations of $1.65, while its revenue of $173.39 billion surpassed the projected $170.71 billion.

The news of Walmart’s strong performance resonated with investors, driving a 5% increase in its share price during early trading on Tuesday.

However, the company’s net income for the quarter ending January 31 dipped to $5.49 billion, or $2.03 per share, compared to $6.28 billion, or $2.32 per share, in the corresponding period last year. Despite the decline in net income, Walmart’s revenue surged from $164.05 billion in the prior-year period.

Forecasted increase in consolidated net sales and adjusted earnings for fiscal years.
Strong financial outlook: Forecasted increase in consolidated net sales and adjusted earnings for fiscal years.

Looking ahead, Walmart forecasts a 4% to 5% increase in consolidated net sales for the fiscal first quarter, with adjusted earnings projected to range from $1.48 to $1.56 per share on a pre-stock split basis. For fiscal 2025, the company anticipates a 3% to 4% rise in consolidated net sales, with adjusted earnings forecasted at $6.70 to $7.12 per share.

Walmart’s resilience amid high inflation is attributed to its value proposition, attracting customers across income brackets. Additionally, the company’s foray into new revenue streams, including advertising and e-commerce expansion, has bolstered its financial performance.

Comparable sales for Walmart U.S. increased by 4%, while Sam’s Club saw a 1.9% rise in comparable sales, including fuel. The surge in global e-commerce sales, up 23% year-over-year and surpassing $100 billion, underscores Walmart’s success in meeting evolving consumer preferences. In the U.S., e-commerce sales surged 17%, driven by initiatives like curbside pickup and home delivery.

Advertising emerged as a lucrative segment for Walmart, with a 33% global growth and a 22% increase in the U.S. year-over-year. Rainey emphasized that the Vizio acquisition would catalyze the growth of this high-margin business segment.

Walmart's quarterly revenue surged 6%,
Walmart’s quarterly revenue surged 6%, driven by robust holiday shopping and double-digit e-commerce growth.

Despite a 4.3% increase in customer transactions compared to the previous year, Walmart observed a slight decline in average ticket size. Rainey noted the potential for deflationary pressures but highlighted the current stability in prices compared to previous quarters.

Contrary to the trend of cost-cutting measures adopted by many companies, Walmart announced plans to open or expand over 150 stores in the U.S. over the next five years.

Moreover, the company committed to modernizing more than 1,400 existing stores and raising store manager wages to an average of $128,000 per year, along with performance-based bonuses.

The announcement of a 3-for-1 stock split and Walmart’s commitment to store expansion and employee compensation enhancements contributed to a positive market sentiment, with Walmart shares trading at $170.36 as of Friday, marking an 8% increase year-to-date and outperforming the S&P 500.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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