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Walmart Smashes Earnings Estimates, Raises Guidance

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Walmart Inc (NYSE:WMT) posted better-than-expected earnings before the opening bell this morning. The big-box retailer reported robust grocery sales and e-commerce trends and boosted its full-year guidance.

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Walmart reports strong earnings

Walmart said shoppers spent their stimulus checks at its stores and on its website and prepared to socialize again amid declining COVID-19 cases and rising vaccinations. The retailer reported $1.69 per share in adjusted earnings and $138.31 billion in sales. Analysts had been expecting adjusted earnings of $1.21 per share and $131.97 billion in revenue.

U.S. comparable-store sales rose 6% amid market share gains in grocery, and analysts had been expecting an increase of 0.9%. Transactions fell 3.2%, but the average ticket size increased 9.5%. Same-store sales for Sam's Club stores rose 7.2%, although tobacco sales declined, negatively impacting comparable sales by about 340 basis points. Membership income grew 12.7%, while the total member count hit a record high.

Walmart International's net sales fell 8.3% year over year to $27.3 billion as the company divested some parts of the business. However, the segment's e-commerce sales grew 49%. Walmart International recently sold British grocery store chain Asda and its majority stake in Japanese grocery store chain Seiyu.

U.S. e-commerce sales jumped 37% even though consumers started to get back to more normal activities. Walmart Chief Financial Officer Brett Biggs told CNBC in an interview that the retailer has been seeing "pent-up demand" and expects it to continue. He added that shoppers are still purchasing items that became popular during the pandemic, like printers and bikes. However, they have also started to buy things like teeth whitener as mask requirements are loosened.

Outlook raised

Walmart also boosted its guidance for the current fiscal year. It now expects high-single-digit increases in earnings per share and operating income. Excluding divestitures, Walmart expects its earnings per share to increase in the low double digits. It had previously expected earnings per share to be flat to up slightly, excluding divestitures. The big-box retailer also reiterated its guidance that same-store sales at Walmart stores in the U.S. and Sam's Club stores will rise in the low single digits, excluding tobacco and fuel.

Biggs said stimulus checks gave the retailer's sales a boost during the first quarter, and that caused them to raise their revenue and profit guidance. He added that trends during the second quarter also caused them to raise their guidance. Shares of Walmart rose by about 4% in early trading.

Walmart is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families.

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