Walmart Produces Inflation-Beating Q4 Earnings Report

Thursday saw Walmart releasing its fourth quarterly earnings report that showed how the retail giant continued to defy soaring inflation and supply chain problems to bring in strong revenues. 

The Q4 report exceeded analyst’s expectations and revealed Walmart to have enjoyed a net income of $3.56 billion. This is contrasted to the loss of $2.9 billion suffered by Walmart for the same period last year when the pandemic was peaking once more.

The report detailed how same-store sales rose by 5.6% at Walmart outlets across the US, however this was at the expense of slowing down online sales growth from 8% to just 1% as the lessening effects of the pandemic forced fewer people to shop online.

Much of strong sales can be attributed to Walmart’s reputation for relative affordability, although the brand has also been smart to use the increased revenues to offset higher costs elsewhere. These included an increase of $400 million in supply chain charges in the US alone, and there was an extra $400 million hit from employee absences as a result of the pandemic.

Thankfully Walmart was able to rely on a return to strong consumer spending and a solid holiday season to deliver yet more impressive earnings that were up 5.6% in comparable sales. Much of this was due to reliable sales of groceries, but other areas such as automotive goods and apparel also showed strong demand.

What this means for the US economy

While much of the focus of stock markets can be on high-flying big tech brands, Walmart could be a far more accurate bellwether for how the US economy is actually recovering from the pandemic. This is because Walmart has an extensive reach across the US and is seen as being an accurate guide to consumer spending.

The fact that Walmart produced such strong earnings figures will be hugely reassuring as it was the first major retail brand to deliver its fourth quarter financial report. It also backed other positive figures recently released that showed how retail sales increased from 3.8% from December to January.

All of which was positive enough for Walmart executives to predict sales to grow at a rate of around 3% in the coming fiscal year. This is because there are expected to be further improvements in the supply chain issues that have dogged the US economy.

Walmart’s solid performance in Q4 is also a success as it showed how the brand had managed to thrive even against a background of the worst inflation in four decades. With higher expenses for things like labor and materials, Walmart could have passed much of the increased cost onto its customers.

But with some adjustments in how any price rises were spread out, it encouraged customers to flock back to Walmart as demand picked up. Plus Walmart’s reputation as a value retailer will have definitely made it more attractive to any consumers feeling the effects of a higher cost of living.

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