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Walmart (WMT) Misses on Q1 Earnings, Lowers FY Profit Outlook

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Updated 17 May 2022

Key points:

  • Retail giant Walmart falls short of the mark, missing Q1 earnings
  • Despite suspected resilience, Walmart fell victim to supply chain disruption and inventory issues
  • EPS of $1.30 fell short of the $1.48 consensus
  • key point

The US’s largest retailer missed on its Q1 earnings this morning in a surprising hit to bulls. Many investors believed that Walmart (NYSE: WMT) was capable of weathering the current macroeconomic climate, relying on strong demand and a solid supply chain, but it was a different story today, with the company repeating much of the same narrative that currently plagues growth all the way from retailers to manufacturers. WMT shares are currently trading at a premarket loss of 6% in response to the surprise earnings miss. 

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You guessed it, Walmart is another victim claimed by rising fuel costs, supply chain difficulties and staffing problems. Although the company raised its net sales outlook by a further 1%, the retail giant stated it expects lower EPS to sink around 1%, compared to a previously expected mid single-digit increase.

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Retailers have been struggling with supply chain disruption since Covid-19, and now companies are facing increasing costs and aggressive inventory levels, weighing on bottom line results. Other factors including unseasonably cool weather affected normally high sales of outside items.

The company reported EPS of $1.30 on a consensus of $1.48. Revenue came in at $141.6B, nudging past analyst predictions of $138.9B. Same-store sales were up 3% against Q121, with e-commerce sales rising a further 1%. 

The surprising results paint a foreboding picture of the current economic climate, where even industry giants are feeling the strain. The unusual environment is likely to affect earnings for months to come, and while inflation sits at skyhigh levels, company’s will be doing everything they can to maintain consumer traction. Walmart finished with a statement regarding the need to adjust and “balance the needs of our customers for value with the need to deliver profit growth for our future”.