Walmart is the number one retailer by sales volume in the United States. The development of your business is often an x-ray of what is happening to the economy. The fiscal first-quarter accounts I provided on Tuesday indicate that things are not going well. Rising costs due to rising fuel and raw materials, rising labor loads and supply chain problems, that is, the same factors that drove US inflation to its highest levels in 40 years, forced the company to lower its earnings forecast.
Walmart sells more and makes less. Inflation is also seen on the revenue side, growing by 2.4% in the first three months of the fiscal year (February to April) to $141,569 million (about €134,500 million at current exchange rates). In fact, the company raised its full-year sales growth forecast and now expects to earn 4% more.
Margins, however, are deteriorating. Despite this growth in sales, profit fell from 2,730 to 2,054 million dollars, down 25% in those three months compared to the same period in 2021. The company blames the increase in costs and thus disappointment of Wall Street investors. In addition, after such a poor start to the year, the company expects a 1% drop in earnings per share for the year as a whole, compared to the previous forecast, which was about 5% growth.
at release, Walmart President Doug McMillon notes, “We generated a solid quarter in revenue across all businesses. We thank our partners for their hard work and creativity. The bottom line was unexpected and the result of the extraordinary environment. U.S. inflation levels, particularly in food and fuel, created even greater pressure.” The combination of margin and operating costs is more than we expected. We are adjusting and we will balance the value needs of our customers with the need to increase profits for our future.”
Other bad news for the results appears in Presentation for Analysts Company Production: Cash generation was negative in the first quarter. The world’s largest distribution group went from operating cash generation (cold and cold cash due to business) of $2,800 million in the first quarter of 2021 to a loss or amortization of $3,800 million in the first quarter of this year.
“The decline was primarily due to higher inventory and procurement costs to support strong sales, lower operating income and the timing of certain payments,” the company says. Free cash flow, which also takes into account investments, was worse: negative 7.3 billion, compared to 600 million collected a year ago.
He knows in depth all aspects of the coin.