One of the best ideas in this environment is to position in companies that have both defensive and growth qualities - like Walmart
Walmart $Walmart(WMT.US$, the world's largest retailer, operates various retail formats including Walmart Stores, Supercenters, Neighborhood Markets, Sam's Club locations in the U.S., as well as a growing ecommerce business. Internationally, Walmart operates in several countries including Canada, China, and Mexico. Recently, the company's omni-channel transformation in the U.S. has been gaining momentum, supporting more sustainable and predictable positive same-store sales, traffic growth, and P/E multiple expansion.
Walmart's F1Q adjusted EPS of $1.47 exceeded both the estimated $1.30 and the Street $1.31 estimates, with a 7.4% increase in U.S. comps. This performance reflected strength in grocery, health, wellness, and private brands. Additionally, the company's U.S. e-commerce sales rose by 27%, led by pickup and delivery services. Sam's Club's comps were up by 7.0%, and global advertising revenue saw a year-over-year growth of over 30%.
In terms of margins, Walmart's F1Q gross margin of 23.7% fell by 18 basis points year-over-year, primarily due to the category sales mix. However, it still outpaced forecasts thanks to normalization in U.S. supply chain/freight costs and a favorable business mix from higher-margin initiatives.
Looking ahead, Walmart raised its F24E adjusted EPS guidance to $6.10-$6.20, expecting a 14c impact from LIFO. The company also raised its F24E consolidated net sales growth and operating income growth guidance. With the continuous strength in grocery supported by strong price positioning, private label, and omni-channel, Walmart is seen as well-positioned for F24, maintaining its 'Buy' status.
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