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Walmart Stock Explodes After Profits Plunge, Retailer Surpasses $500 Billion Market Cap

Walmart (WMT) once again seduced Wall Street, causing the stock to jump 7% at the start of Thursday’s session.

For its first fiscal quarter 2025, America’s largest retailer reported revenue of $161.51 billion, above expectations of $159.58 billion, while adjusted earnings per share were also above 0 $.60, versus $0.53 expected.

“Customers continue to come to Walmart not only for value, but also for convenience,” Walmart CFO John David Rainey told Yahoo Finance. “We see that portfolios are still stretched, they (clients) are still looking for value.”

On a call with investors, CEO Doug McMillon said, “The momentum we’re seeing across the company is driven by growth in units sold and number of transactions as well as share gains market, including in general merchandise. These are not results driven by inflation. »

Total U.S. same-store sales rose 3.9% year over year, driven by growth at Sam’s Club, up 4.4%, as Americans sought deals on groceries. The wholesaler-retailer reached an all-time high in terms of members and plus members, resulting in member revenue growth of more than 13%.

Its namesake stores saw same-store sales rise 3.8%, boosted by customers visiting more frequently, although ticket numbers remained stable. The company has suggested it is gaining market share among higher-income households.

Global e-commerce sales jumped 21%, driven by in-store pickup and delivery as well as its online marketplace.

The results come as the company plans to cut hundreds of jobs and has asked its employees to relocate to its headquarters in Bentonville, Ark., the WSJ reported Tuesday.

Walmart is America’s largest employer, with 1.6 million American workers.

During the quarter, the company also conducted a stock split for the 12th time in 50 years. Its shares are up 13.9% this year, outperforming those of the S&P 500 (^GSPC) 10% gain.

Before the report was released, UBS analyst Michael Lasser wrote that “the stock has room to grow” in a note to clients. He added that the first quarter should demonstrate “further evidence that the stock is indeed a good fit for what the market is currently looking for, consistent activity that is more insulated from ongoing macroeconomic pressures than the rest of the pack.”

“Walmart is in a dual position to win over both low-end and high-end consumers over the coming years,” Deutsche Bank analyst Krisztina Katai told Yahoo Finance on the phone before the report was released.

HSBC analyst Daniela Bretthauer called the stock a top pick ahead of the report.

“The future of grocery shopping is becoming increasingly omnichannel, and Walmart is America’s largest grocer,” Bretthauer told Yahoo Finance. “You have a big player online, it’s Amazon, but in the grocery business…Walmart has a big advantage.”

Merchandise sales fell into the low single digits, as they have in the past three quarters. But U.S. food sales grew in the mid-single digits, driven by the sale of more fresh foods and private-label items, Mark Astrachan, Stifel’s chief executive, wrote in a memo to the customers following the results..

The company benefits from its pricing power and economic scale, as well as its technology investments and $9 billion in store renovations.

Recently, the company launched a new private label called bettergoods, which offers trendier, higher-quality items at prices ranging from less than $2 to less than $15.

Its lucrative advertising business is also increasing its revenue, with a 24% increase in global sales and a 26% increase in U.S. sales.

Its subscription business, Walmart+, also saw double-digit growth, with CEO McMillon saying members were engaging more frequently and spending more than other customers.

Here’s what Walmart reported in the first quarter of its 2025 fiscal year, compared to Wall Street estimates compiled by Bloomberg:

Income: $161.51 billion versus $159.58 billion

Adjusted earnings per share: $0.60 versus $0.53

Overall U.S. same-store sales growth: 3.9% versus 3.42%

Walmart U.S. same-store sales growth: 3.8% versus 3.45%

Sam’s Club U.S. same-store sales growth: 4.4% versus 3.3%

Walmart US e-commerce growth: 22% versus 13.33%

Walmart employee fulfilling Instacart orders in the produce aisle, North Carolina.  (Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images)Walmart employee fulfilling Instacart orders in the produce aisle, North Carolina.  (Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images)

Walmart employee fulfilling Instacart orders in the produce aisle, North Carolina. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images) (UCG via Getty Images)

For the full fiscal year 2025, the company expects net sales to increase in the high 3-4% range and operating income to increase in the high 4-6% range.

“We will revisit our full-year guidance at the end of the second quarter. This is more in line with our historical cadence of updates and consistent with the philosophy we have as a management team “recognizing the initial momentum, but also remaining cautious at the start of the year given the macroeconomic uncertainty and much of the year still ahead of us,” said Walmart Chief Financial Officer John David. Rainey, during a call with investors following first quarter fiscal 2025 results.

Correction: A previous version of this article misspelled Walmart CEO Doug McMillon’s last name. We regret the error.

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email him at bdipalma@yahoofinance.com.

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News Source : finance.yahoo.com
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