Shares of Walmart Inc. (NYSE: WMT) were up 2.5% on Tuesday after the retailer reported earnings results for the first quarter of 2022 that raced past market expectations. The results were driven by strong trends in ecommerce and grocery. The company anticipates pent-up demand for the rest of the year to help drive growth and this optimism allowed it to raise its outlook for the second quarter and full year of 2022.
Total revenues climbed 2.7% to $138.3 billion in Q1 from the same period a year ago, beating estimates. The top line took a hit of approx. $4.2 billion from the recent divestitures in Walmart International. Adjusted EPS amounted to $1.69, reflecting a growth of 43% from last year and surpassing market expectations.
In the US, Walmart saw stronger-than-expected comp sales growth, helped by stimulus spending, despite lapping the stock-up caused by the COVID-19 pandemic last year. Comp sales increased 6% in Q1 and 16% on a two-year stack. Net sales in the US segment rose 5% to $93.2 billion, helped by a 37% growth in ecommerce.
The company saw strong market share gains in grocery and its pickup and delivery options have helped improve the convenience factor for customers. Average basket size increased by nearly 10% due to customer trip consolidation.
Walmart saw broad-based growth across categories such as apparel, home, and lawn and garden. The company plans to continue investing in its general merchandise business and driving growth in higher-margin categories. As part of these efforts, Walmart is acquiring the virtual fitting room company Zeekit, which will help drive growth in its apparel business.
Within international, Walmart is shifting its focus to higher-growth markets and as part of these efforts, the company recently divested its businesses in the UK, Japan and Argentina. International net sales dropped 11% year-over-year on a constant currency basis. Excluding these divested markets, net sales increased 5.1%.
International ecommerce sales rose by around 64% and penetration grew to about 16% of sales. Ecommerce sales increased 115% in Canada and 60% in China.
Walmart expects FY2022 consolidated net sales to grow in the low to mid-single digits, excluding the impact of divestitures. Full-year consolidated operating income is expected to increase in the high single-digits and EPS is expected to increase in the low double digits. For the second quarter of 2022, EPS, excluding divestitures, is expected to be up in the low single digits.
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