Retail behemoth Walmart (NYSE:WMT) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 4.1% year on year to $180.6 billion. The company expects next quarter’s revenue to be around $167.2 billion, close to analysts’ estimates. Its non-GAAP profit of $0.66 per share was 2.2% above analysts’ consensus estimates.
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Walmart (WMT) Q4 CY2024 Highlights:
Company Overview
Known for its large-format Supercenters, Walmart (NYSE:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.
Large-format Grocery & General Merchandise Retailer
Big-box retailers operate large stores that sell groceries and general merchandise at highly competitive prices. Because of their scale and resulting purchasing power, these big-box retailers–with annual sales in the tens to hundreds of billions of dollars–are able to get attractive volume discounts and sell at often the lowest prices. While e-commerce is a threat, these retailers have been able to weather the storm by either providing a unique in-store shopping experience or by reinvesting their hefty profits into omnichannel investments.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
With $681 billion in revenue over the past 12 months, Walmart is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because there is only so much real estate to build new stores, placing a ceiling on its growth.
As you can see below, Walmart’s sales grew at a tepid 5.4% compounded annual growth rate over the last five years (we compare to 2019 to normalize for COVID-19 impacts) as its store footprint remained unchanged.
This quarter, Walmart grew its revenue by 4.1% year on year, and its $180.6 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 3.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 4.1% over the next 12 months, similar to its five-year rate. We still think its growth trajectory is satisfactory given its scale and suggests the market sees success for its products.
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Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
Walmart has kept its store count flat over the last two years while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Note that Walmart reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Walmart has been one of the most successful retailers over the last two years thanks to skyrocketing demand within its existing locations. On average, the company has posted exceptional year-on-year same-store sales growth of 5.1%. Given its flat store base over the same period, this performance stems from not only increased foot traffic at existing locations but also higher e-commerce sales as demand shifts from in-store to online.
In the latest quarter, Walmart’s same-store sales rose 4.6% year on year. This performance was more or less in line with its historical levels.
Key Takeaways from Walmart’s Q4 Results
Revenue was just in line, with same-store sales roughly meeting expectations. Looking ahead, the company's full-year EPS guidance for next quarter fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 8.6% to $94.99 immediately following the results.
Walmart didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free .
