Walmart Issues Inter Period Warning
July 26, 2022
Company lowers profit outlook for Q2 and FY23
Operating margin expected to be about 4.2% for Q2 and 3.8% to 3.9% for FY23
Outlook for net sales higher for FY23 given Q2 results, elevated by inflation
provided a business update and revised its outlook for profit for
the second-quarter and full-year, primarily due to pricing actions aimed
to improve inventory levels at Walmart and Sam’s Club in the U.S. and
mix of sales.
“The increasing levels of food and fuel inflation are affecting how
customers spend, and while we’ve made good progress clearing hardline
categories, apparel in Walmart U.S. is requiring more markdown dollars.
We’re now anticipating more pressure on general merchandise in the back
half; however, we’re encouraged by the start we’re seeing on school
supplies in Walmart U.S.” said Doug McMillon, Walmart Inc. president and
chief executive officer.
Net sales include a headwind from currency of about $1 billion in the second quarter. Based on current exchange rates, the company expects a $1.8 billion headwind in the second half of the year.
The company maintains its expectations for Walmart U.S. comp sales growth, excluding fuel, of about 3% in the back half of the year.
Operating income for the second-quarter and full-year2,3 is expected to decline 13 to 14% and 11 to 13%, respectively. Excluding divestitures1, operating income for the full year2 is expected to decline 10 to 12%.
Adjusted earnings per share4 for the second quarter and full year is expected to decline around 8 to 9% and 11 to 13%, respectively. Excluding divestitures1, adjusted earnings per share4 for the full year is expected to decline 10 to 12%.
The company’s updated guidance includes the effects of the following
discrete items in the second quarter:
Proceeds from a special dividend received by the company related to its equity investment in JD.com, which positively affects other gains and losses by $182 million and adjusted earnings per share by $0.05
The company will provide further details on business performance and its outlook for the year when it reports second-quarter results on Aug. 16, 2022.