Walmart - Tough FY 2024 moving ahead?

Apart from the higher revenue growth, the outlook and near-term seem to be muted and challenging.

Here is what I gather from their report.

YoY-wise, the top line surges by +7.3%. However, gross profit slumped by -83 bps due to markdowns and a mix of sales.

For total FY'23, the gross margins were worse, down by -98 bps.

Thus, operating income got buffeted as well, coming in at USD 5.6 billion for Q4'23, down -5,5% YoY.

FY'23 wise, it is down by -21.3%.

Lower income for FY'23 also saw a lower ROA and ROI for Walmart. ROA is down by 100 bps while ROI decreases by 220 bps.

Although profits declined, one silver lining for investors to take comfort in is the higher free cash flow.

Higher cash from operating activities, an increase of $4.9 billion when compared to the same period in the prior year is primarily due to moderated levels of inventory purchases, partially offset by a decline in operating income and the timing of certain payments.

Even with an increase in capital expenditure, FCF still manages to inch up.

The worst saved for the last - pessimistic guidance for Q1'24 and FY'24.

Net sales for FY'24 are only expected to increase from 2.5% to 3.0%.

Moreover, interest expense is shooting up by USD 750 million or a whopping USD 0.20 in terms of EPS.

The worst is out for Walmart. But do you think it's a buying opportunity?

Let me know in the comments!

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