Retail Pro Breaks Down Walmart’s Q4: ‘Gets A Pass’

Retail Pro Breaks Down Walmart’s Q4: ‘Gets A Pass’
  • Retail giant Walmart reported a top-and-bottom miss in Q4 results.
  • Several key metrics slowed down in the quarter.
  • One retail pro says the company "gets a pass."

Retail behemoth Walmart reported Tuesday morning fourth quarter results which fell short of expectations. The company said it earned $1.38 per share in the fourth quarter on revenue of $141.7 billion. Both numbers were short of the $1.44 and $142.64 billion Wall Street analysts were expecting. 

Q4 Highlights And Guidance

Beyond the top-and-bottom line, investors have some reasons to be concerned with Walmart’s performance. Same-store sales in the U.S. disappointed as it came in short of the 2.3% expected at 1.9%.

Total transactions at Walmart stores rose 1% during the quarter but this represents a slowdown from the 1.5% growth shown in the same quarter a year ago. Similarly, average ticket growth of 0.9% in the quarter represents a slowdown from 2.6% growth a year ago.

Walmart’s fast-growing e-commerce business grew 35% in the quarter and ended the full-year with a 37% growth rate. This exceeded management’s internal expectations of 35% growth. However, management expects 2021’s growth in online sales to cool down to around 30%.

The company also guided to net sales growth of around 3%, U.S. comp sales growth of at least 2.5% and EPS to come in a range of $5.00 to $5.15.

By most standards, Walmart’s report should be viewed as disappointing as the company mostly fell short of expectations or showed slowing growth in important categories. But according to retail expert Jan Kniffin of J. Rogers Kniffen, Walmart “gets a pass.”

He explained on CNBC’s “Squawk on the Street” that Walmart actually performed better than “anyone really thought they would perform.” In fact, Walmart’s report was “OK” and management’s outlook for the coming fiscal year is “mediocre.” 

At the end of the day, Walmart is still showing signs of growth for the coming year. Most notably, online sales are expected to grow more than 30% off a very large base of $50 billion.

Walmart deserves credit for not only growing online sales faster than rival Target, but “a heck of a lot” faster than industry giant Amazon, he said. Part of the momentum can be attributed to a unique feature neither rival can offer. Walmart shoppers can buy items online to be picked up across 3,200 stores while delivery to a consumer’s home is available from 1,600 stores.

What’s most important for Walmart moving forward is to be aggressive with new ideas. So far, the company enjoys a reputation for “doing all the right things” for both the shareholder base and customers.

By Jayson Derrick
Jayson Derrick has been writing professionally about stocks since 2011. He is particularly interested in alternative investments, hedge funds, and activist investing. He is a big fan of NHL hockey and lives in Montreal, Canada with his wife and four year old daughter.
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