Walmart gives disappointing Q2 guidance, warns about stress among low-income consumers
The retailer reported earnings before the bell on Thursday.
Walmart, America’s largest retailer and a bellwether for the US consumer, dropped after it reported Q1 earnings results that hit Wall Street estimates but gave lukewarm guidance for the current quarter. The company warned that lower-income shoppers are showing signs of financial stress and that rising fuel costs could pressure prices and margins later this year.
For the three-month period ending in April, Walmart reported:
Adjusted earnings per share of $0.66, right in line with what analysts polled by FactSet were expecting. Walmart said it absorbed roughly $175 million in higher-than-expected fuel costs during the quarter.
Revenues of $177.8 billion, more than the $174.8 billion analysts were penciling in.
For the current quarter, Walmart said it expects:
Adjusted EPS to fall between $0.72 and $0.74, less than the $0.75 expected.
Sales to grow 4.0% to 5.0% year over year — a lower midpoint than the 4.9% growth the Street had guessed.
For its current fiscal year, the company reiterated its guidance, which is:
Adjusted EPS to hit between $2.75 and $2.85, less than the $2.90 analysts expect.
Sales to increase 3.5% to 4.5% year over year. Analysts had been forecasting about 5% annual revenue growth.
Walmart fell 7% by about 10:30 a.m. ET. If it holds those loses, it would be the worst day for the company since November 2023. The stock is up about 7.8% since the start of the year through Wednesday’s close.
CFO John Rainey said the company expects “somewhat higher retail price inflation” in the current quarter and the second half of the year.
Rainey also said it’s seeing “the high-income customer spending with confidence,” while “the lower income consumer is more budget conscious and perhaps navigating financial distress” — the latest sign America’s in a K-shaped economy.
He said the average number of gallons customers purchase at Walmart fuel stations recently fell below 10 for the first time since 2022.
“That’s an indication of stress,” he said.
