Stressed-out shoppers are keen to save money, helping Walmart achieve stronger-than-expected quarterly sales. It also increased its market share in the grocery segment, and its ad business continues to flourish.
For the fourth quarter, Walmart’s sales climbed 7.3% to $164 billion, a gain of 7.9% in constant currency. In the U.S., comparable sales rose 8.3% for the quarter and 13.9% over two years. Sales in its ecommerce division advanced by 17% and 18% over the two-year period.
Sam’s Club sales rose 11.3% to $21.4 billion.
Revenues in that division rose 20%, and ad sales soared nearly 30% for the full year, reaching $2.7 billion.
Operating income fell 5.5% to $5.6 billion, down from $5.9 billion a year ago.
While those results beat Wall Street expectations, its forecast didn’t. Walmart expects a sales increase of 4.5% to 5% in constant currency for the first quarter and a total increase of just 2.5% to 3% for the full year. The company cited concerns about increasing pressure on consumers, including rising interest rates and an increase in credit delinquencies.
In its grocery division, sales increased by a percentage range in the mid-teens and the low 20s on a two-year comparison. Some of that is inflation, particularly in pet and personal care products. But it also increased the number of units sold, gaining market share. And its private-label brands continued to increase penetration.
More concerning, however, are declines in its general merchandise division, falling in the low single digits, especially in toys, electronics, home, and apparel–despite an increased share of shoppers.
“Despite more people coming to Walmart, fewer shopped for non-food items,” writes Neil Saunders, managing director of GlobalData, which tracks retail performance. “Among lower-income shoppers, this was a consequence of tighter budgets and some cutting back on discretionary purchases. Among Walmart’s higher-income customers, including new converts, many eschewed the store for general merchandise, electing to shop and spend elsewhere. To convert more middle- and higher-income segments, it needs to improve both its assortments and the way it presents them in store.”