Walmart Misses Profit Expectations, Depicting Consumers’ Pressure


By Cristian Bustos. Originally published at ValueWalk.

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Quarterly earnings of Walmart Inc (NYSE:WMT) fell short of Wall Street estimates as the giant retailer’s earnings per share topped $1.30 against expectations of $1.48. For investors, the results reflect how consumers are dealing with rising inflation and soaring fuel costs.

Walmart’s Earnings Report

Walmart’s net income dropped to $2.05 billion from $2.73 billion during the first quarter, meaning it fell from 97 cents per share to 74 cents per share.

Q1 2022 hedge fund letters, conferences and more

In a release Tuesday morning, CEO Doug McMillon said the results “were unexpected and reflect the unusual environment,” as inflation in the U.S. is the highest in four decades, and the consumer price index soared by 8.3% in April from the same month last year.

Chief Financial Officer Brett Biggs told CNBC that the main issues behind the results were the increase in energy prices, high inventory levels, and increasing labor costs.

Still, the company’s revenue jumped from $138.31 billion to $141.57 billion year on year, surpassing Wall Street’s expectations of $138.94.

Same-store sales jumped 3% from the year-ago period or 9% on a two-year basis. E-commerce sales increased by 1% —38% over a two-year period.


Anticipating higher inflation, Walmart had increased its inventory by 33% in order to keep a decent stock. However, many of the seasonal items piled up in warehouses given the cold weather during springtime.

McMillon said Walmart will be able to sell the merchandise in the next quarters, and that the company was already “off to a good start from a sales perspective” for the second quarter. Walmart’s strategy is to find the right balance between keeping prices low without sacrificing profit.

The CEO said, “Price leadership is especially important right now and one-stop shopping becomes more than just convenience when people are paying over $4 a gallon for fuel.”

Upon the release of the earnings report, Walmart’s shares dropped 9% on Tuesday morning after closing Monday at $148.21, as the retailer’s stock has jumped 2.5% so far in 2022 outperforming the market.

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