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Walmart Beats Estimates, Digital Sales Continue to Rise

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Key takeaways

Walmart (WMT) stock rose ~4% in the pre-market session today following the retailer’s stronger-than-expected fiscal 2019 fourth-quarter results. Walmart’s e-commerce initiatives continued to drive its sales, and its in-store sales improved. Walmart’s top line beat analysts’ estimate, thanks to strong growth in its US comparable sales led by an increase in ticket size and traffic.

Walmart’s e-commerce sales continued to grow strongly, driven by the continued expansion of its grocery pickup and delivery services and its expanded e-commerce offerings.

The retailer’s fourth-quarter bottom line was also impressive. It adjusted EPS rose YoY (year-over-year) and surpassed analysts’ estimate thanks to higher comps and a lower effective tax rate. We expect Target’s (TGT) and Costco’s (COST) EPS to also grow strongly, driven by comps and lower tax.

Management expects its e-commerce sales to continue to grow healthily in fiscal 2020 despite a tough YoY comparison, an encouraging sign. 

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The quarter in numbers

Walmart’s net sales rose 1.9% YoY to $138.8 billion. Its US e-commerce sales rose 43% YoY, and its US comps rose 6.8% on a two-year stack basis—its strongest growth in nine years. The company’s adjusted EPS rose 6.0% YoY to $1.41, beating analysts’ estimate of $1.33.

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