Walmart's Q1 financial report released, e-commerce business returns to growth curve

It is learned that on May 18, Walmart released its first quarter financial report for 2023 ending April 28. According to the financial report data, Walmart's Q1 consolidated revenue was US$152.3 billion, an increase of 7.6%, exceeding Wall Street's estimate of US$148.76 billion. The grocery business and e-commerce business grew strongly this quarter.

Based on this quarter's better-than-expected financial results, Walmart expects sales to increase for the rest of the year. For the full year 2023, Walmart expects consolidated net sales to increase by approximately 3.5% and operating income to increase by 4% to 4.5%; for the second quarter, Walmart expects consolidated net sales to increase by 4% and consolidated operating income to decrease by 2%.

Grocery business is strong as high-income and young consumers come in

The financial report shows that in the first quarter, Walmart Sam's Club sales increased by 17.4% and membership income increased by 10.5%, setting a record for the largest quarterly membership registration in the history of Sam's Club in the United States.

Rising grocery prices have attracted more high-income consumers to Walmart, and these buyers are more loyal. Walmart's CEO talked about the importance of high-income consumers to Walmart's profitability in the recent earnings call, and data from the second quarter of last year showed that nearly 75% of Walmart's market share growth came from customers with "annual household incomes of $100,000 or more."

The typical Walmart customer is a middle-aged, white, suburban woman who makes about $80,000 a year, according to analytics firm Numerator. Yet Walmart's low prices and penchant for discounts have also long attracted lower-income shoppers.

In terms of sub-categories, Walmart Executive Vice President and Chief Financial Officer John David Rainey said that in the first quarter, general merchandise sales in the United States fell by "mid-single digits," but declined to disclose specific figures. However, food and consumables sales achieved low double-digit growth.

Walmart earns higher margins on general merchandise than on food, meaning the shift to grocery could slow profit growth. Rainey said he expects the trend to continue through the end of the year. Cooler spring weather also led to lower sales for its gardening and outdoor users.

Walmart e-commerce returns to growth track with three major strategies

Walmart's e-commerce business also contributed to its financial performance growth.

In the first quarter of 2023, Walmart's U.S. e-commerce sales increased 27% year-on-year, the largest increase since the first quarter of 2021, and total comparable sales excluding fuel increased 8.2%; international e-commerce sales increased 25%, and comparable sales increased 12.9%.

The growth in e-commerce sales is thanks to Walmart's continued improvements to this business, from redesigning its shopping app and e-commerce website, working to increase the number of third-party sellers, to promoting the membership program Walmart+.

In 2020, at the beginning of the epidemic, Walmart's e-commerce sales in the United States soared. In the second quarter of that year, Walmart's e-commerce sales increased by 97% year-on-year, nearly doubling.

In the following years, as more and more consumers returned to offline shopping, Walmart's e-commerce sales began to decline. Until recently, Walmart's e-commerce sales showed signs of returning to the growth track.

Walmart CEO said at this quarter's earnings conference that e-commerce growth was driven by curbside pickup and delivery services. In the first quarter, the number of Walmart+ members continued to grow, setting a record high, with nearly 50% of new members joining through curbside pickup services.

Here’s a breakdown of Walmart’s year-over-year U.S. e-commerce sales growth over the past nine quarters:

1. Q1 2021: 37%

2. Second quarter of 2021: 6%

3. Q3 2021: 8%

4. Fourth quarter of 2021: 1%

5. Q1 2022: 1%

6. Second quarter of 2022: 12%

7. Q3 2022: 16%

8. Q4 2022: 17%

9. Q1 2023: 27%

This week, major U.S. retailers released their first-quarter earnings reports, including Target, Home Depot and TJX, which owns TJMaxx and Marshalls, all showing a slowdown in sales compared with the past few years. However, both Target and Home Depot lowered their full-year guidance. Walmart was the winner among the large U.S. retailers this quarter.

Editor✎ Ashley/

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