Walmart reported a profit for the first quarter of fiscal 2023 that declined 24.8 percent from last year, hurt by lower gross margins and net losses on equity investments.
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"Bottom-line results were unexpected and reflect the unusual environment. U.S. inflation levels, particularly in food and fuel, created more pressure on margin mix and operating costs than we expected," said Doug McMillon, President and CEO.
Consolidated net income attributable to Walmart for the quarter was $2.05 billion or $0.74 per share, lower than $2.73 billion or $0.97 per share in the prior-year quarter.
The results for the latest quarter include $0.56 per share of net losses on equity investments. Excluding items, adjusted earnings for the quarter were $1.30 per share, compared to $1.69 per share last year.
Total revenue for the quarter, comprising net sales and membership and other income, grew 2.4 percent to $141.57 billion from $138.31 billion in the same quarter last year. Revenues grew 2.6 percent to $141.95 billion in constant currency.
Total revenue was negatively affected by $5.0 billion due to divestitures and $0.4 billion from currency.
Net sales grew 2.3 percent to $140.29 billion, and Membership and other income increased 11.3 percent to $1.28 billion from last year. Consolidated U.S. comp sales increased 4.0 percent.
Walmart U.S. comp sales increased 3.0 percent and net sales rose 4.0 percent to $96.90 billion, led by market share gains in grocery. Walmart U.S. eCommerce sales grew 1 percent.
Sam's Club comp sales increased 10.2 percent and net sales grew 17.5 percent to $19.62 billion from last year. Membership income increased 10.5 percent.
However, net sales at Walmart International declined 13.0 percent to $23.76 billion, but decreased 11.6 percent to $24.14 billion in constant currency.
Net sales at Walmart International were negatively affected by $5.0 billion, related to recent divestitures, and changes in currency exchange rates also negatively affected net sales by $0.4 billion.
Consolidated gross profit rate decreased 87 basis points, primarily due to Sam's Club and 38 basis points in Walmart U.S. on elevated supply chain costs and product mix.
Looking ahead the second quarter, the company now expects earnings per share to be flat to up slightly, compared to prior guidance for a low to mid-single-digits growth. It also expects consolidated net sales growth of 5 percent, with Walmart U.S. comp sales growth of 4 to 5 percent, excluding fuel. Analysts expect earnings of $1.91 per share on revenues of $146.65 billion for the quarter.
Looking ahead to fiscal 2023, the company now projects earnings to decline about 1 percent and to be flat, excluding divestitures. It also expects consolidated net sales growth of 4 percent in constant currency and about 4.5 to 5 percent, excluding divestitures, with Walmart U.S. comp sales growth of about 3.5 percent, excluding fuel. ■