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Walmart Gains on Boost From Guidance Amid Cost Pressures

Published 02/17/2022, 09:20 PM
© Reuters.
WMT
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By Dhirendra Tripathi

Investing.com – Walmart stock (NYSE:WMT) traded 3% higher in premarket Thursday after the company guided for a 3% rise in total net sales this year.

Adding to the gains in the stock was its 49th consecutive year of dividend increases and the announcement of plans to allocate at least $10 billion to buying back shares this financial year.

The guidance follows a quarter when net sales rose 0.5% to near $153 billion, signaling the pandemic-fueled demand is still holding up, and that Walmart can pass on cost pressures.

The U.S.'s biggest traditional retailer nonetheless assumes Covid-related costs pressures and supply chain disruptions will ease as the year progresses.

Walmart's domestic sales grew 5.7% quarter-on-quarter to top $105 billion in the three months through January. 

Walmart International net sales took a hit of about 23% due to divestitures in China and Mexico. Flipkart, the company’s online format in India, delivered strong growth, Walmart said.

The company closed the year with inventory up 26%, as it prioritized in-stock levels for its ‘Everyday Low Price’ offers. That meant costlier goods and in-transit shipments, but the company used its size and negotiating heft to ensure that operating expenses, as a percentage of net sales, only inched up.  

Adjusted profit per share in the quarter was $1.53 and beat estimates. EPS in the current year is seen up around 5%.

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