Walmart Q4 2022 Results

James Harris
Feb 24, 2023

High Impact CEO James Harris Responds to Walmart Q4 Release

Walmart Stores Inc. released it’s Q4 and full year results on Tuesday, showing that a strong Q4 helped improve overall 2022 (FYE2023) annual performance. Walmart saw revenue improve globally by +7.3% in Q4, +6.7% in 2022. This growth was driven by Walmart US (+8%) and secondarily, Sam’s Club (+12.2%). Walmart International grew +2.1% in the quarter and remained flat for the year.

Walmart Stores US saw net sales of $113.7B, with comparable store sales up +8.3% driven by transactions increasing +1.8% and average basket increasing +6.3%. Walmart realized market share gains in grocery as more shoppers, including higher income households using more of their grocery dollars at Walmart due to high inflation and a flattening economy.

Grocery saw sales growth in the mid-teens with inflation contributing largely to this, along with market share gains. Health and wellness realized growth in the low double-digits with general merchandise categories declining in the mid-single digits. GM declines were driven by softness in toys, electronics, home and apparel while automotive and seasonal hardline had strong results.

Ecommerce sales grew by +17%, driven by store-fulfilled pick up and a 41% growth in Walmart Connect advertising revenue. Globally, Walmart ended the year with advertising revenue of $2.7B, growth of 30% over 2021.

Inventory in the fourth quarter improved considerably showing a 15% improvement compared to Q3. Year-over-year inventory declined 2.6% in retail dollars. Inflation has a significant impact on total inventory levels, but the decline of inventory units more than offset inflationary impacts. A portion of this decline is the result of an increase in markdowns on general merchandise products, resulting in higher unit sales, but compressing gross margins. Walmart US gross profit rate decreased 2.6% for the quarter. Operating income for the quarter grew 3.8%, improving the YTD performance. Profit declined 4.5% for the year.

The Walmart stock priced closed on February 17 at $146.48 with results released in pre-trading hours on the 21st . The stock closed on Thursday at $142.09. While Q4’s results shored up the stock somewhat, Walmart’s outlook for 2023 sent the stock tumbling.

Walmart is predicting 2.5-3.0% revenue growth globally in 2023 with Walmart US comp sales growth estimated at 2.0-2.5%. Walmart US saw comp store growth of 6.6% in 2022 and the softer forecast for this year, along with Home Depot’s forecast of roughly the same sort of softness has sent a shiver through Wall Street as inflation remains strong and predictions of recession continue to grow.

With the market share gains that Walmart has realized throughout 2022, the softness in sales growth is reflective of what the company sees in the total economy, a reduction in discretionary spending and a consumer focus on private brands instead of more expensive branded products.

Three Ways to Approach Growth in 2023

1 - Bust Inflation - Go after delivering value. Cheaper is not always better. But shoppers’ budgets will be stretched and as a brand, you can help deliver value and excitement.

2 - Bring the Data - Walmart is increasingly data driven. Between investments in Walmart Luminate and activations with Walmart Connect, there are important signals to utilize amongst the noise.

3 - Marketplace Growth - With the increasing complexity of managing e-commerce costs, I expect Walmart to push into 3P Marketplace with speed. Be ready to win.

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