Wall Street doesn’t like surprises, especially if they come from a company that doesn’t usually deliver them.
Walmart Inc. (NYSE: WMT) on Tuesday published the results for the first quarter of fiscal year 2023, which were not even expected by its leaders. Bottlenecks in supply chains, higher fuel and labor costs, and a general surge in inflationary pressures all led to a retailer from Bentonville, Arkansas, reporting diluted earnings per share of 74 cents, down 23 , 7% year on year and a significant decrease from consensus analysts ’estimates of $ 1.48 per share.
There was some external noise in the quarter, namely 56 cents per share, due to lower valuation of investment in shares. Other than that, however, earnings per share of $ 1.30 were still much lower than analysts and the company expected.
Shares were killed from the start of trading, and losses shifted to trading in the afternoon. As of 14:30 Eastern European time, shares were down more than $ 17 per share, down more than 11.6%.
Operating income in fixed currency fell 22.7% to $ 5.3 billion. The US operation, which makes up the bulk of Walmart’s business, was down 18.2% year-over-year to $ 4.46 billion.
Total revenue excluding currency adjustments rose 2.6% to $ 141.9 billion, Walmart reported.
Walmart’s updated guide for the entire fiscal year was mixed. Revenue is projected to grow from 4.5% to 5%, excluding the impact of sales, the company said. Revenue from operations in the US should grow by 3.5% without taking into account the impact of volatile fuel costs. However, earnings per share will grow by up to 1% and operating income will fall by 1%.
Revenues from e-commerce rose 1% year-over-year as more consumers shifted their purchases to online stores.
In a statement, Walmart President and CEO Doug McMillan called the results “unexpected.” Macmillan told analysts that spending spikes in the second half of the quarter, partly caused by Russia’s invasion of Ukraine, which began on February 24, happened “very quickly” and put Walmart in catch-up mode.
The company said it still faces inflation costs, especially related to food. In the foreseeable future, inflation in general commodity prices may peak, Walmart said.