Nobody said life would be easy, even if you're largest retailer in the world.
Walmart (WMT) has been the subject of some unpleasant headlines lately.
The most recent of them comes via The Wall Street Journal, which reported on Tuesday that the company is cutting hundreds of corporate jobs and asking most remote workers to move to offices.
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Workers in small offices in Dallas, Atlanta and Toronto are being asked to move to other central hubs like Walmart’s headquarters in Bentonville, Ark., as well as Hoboken, N.J., or Northern California, the Journal reported, citing people familiar with the matter.
Walmart will still allow staff to work remotely part of the time, as long as they are in offices the majority of the time.
The country's largest employer, Walmart has about 1.6 million U.S. workers, most of them in stores and warehouses.
The company said in April that it would close all 51 of its health centers and sunset its entire health division. Walmart that rising operating costs and a challenging reimbursement environment “make the care business unsustainable for us at this time.”
The clinics, often located directly next to stores, offered primary-care services and telehealth appointments. Last year, Walmart said it was planning to have 75 of the clinics by the end of 2024.
Analyst optimistic about Walmart's Q1
Meanwhile, Walmart closed 24 stores in 2023, up from the originally slated 15.
These closures affected 14 states and Washington, with four stores closing in Chicago and eight closing in Illinois, the most of any state.
The retail giant has closed more stores in 2024, including two underperforming locations in California.
Here's one Walmart that's closing and auctioning off inventory.
The company is scheduled to report first-quarter earnings on Thursday, marking a big week for quarterly results, as Home Depot (HD) and Cisco Systems (CSCO) are also scheduled to release their earnings numbers.
Analysts expect Walmart to post a bottom-line profit of 54 cents a share on revenue of $157.83 billion.
A year earlier the company reported first-quarter adjusted earnings of $1.30 per share on $141.6 billion in revenue.
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TheStreet Pro's Chris Versace called Walmart's figures the "more important retailer report to pay attention to" as a gauge of consumer activity.
"When we think about what Walmart ... they have general merchandise, they have grocery, they have private label," he said. "So, what they have to say about the trends that they're seeing in consumer spending, trading down, smaller baskets. fewer items in the cart, smaller ticket sizes, that's going to be a lot more insightful to us as a read-through on the consumer."
Shares of Walmart recently traded at about 25 times expected earnings, up from a 10-year average valuation of about 20, suggesting investors expect strong profit growth, Reuters reported, citing LSEG data.
Several analysts issued research reports ahead of Walmart's earnings release and they accentuated the positive.
“Despite a volatile consumer spending backdrop, increased concerns on the health of the low-end consumer, and the relative resiliency of shares of WMT, we approach its 1Q print with optimism," wrote Deutsche Bank analyst Krisztina Katai, who has a buy rating and $70 price target on the stock.
Walmart added to 'Tactical Outperform' list
Katai said that Walmart generated good momentum throughout the quarter and that "we will see evidence that its recent share gains are sustainable."
"To this point, we highlight WMT's very strong pricing position, aided by incremental rollback activity ... and we think its premium private label push will help drive volume and retain higher income households," she wrote.
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While Katai said she does not expect changes to full-year guidance until the second quarter, investors might see a modest raise in the outlook considering the initial guidance was perceived to be conservative.
Walmart likely sustained sales momentum and market-share gains through the first quarter, she said.
In addition, Katai said the closure of the health centers will likely benefit the profit and loss statement in the second half.
D.A. Davidson added Walmart to the firm's "Best-of-Breed Bison" list, which includes "best-in-class companies with sustainable moats and favorable risk /reward dynamics."
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(In case you were wondering, the bison is D.A. Davidson’s "logo, mascot, talisman" and the firm said on its website that the massive mammal "symbolizes culture, tradition, resourcefulness and resilience.")
Walmart trades at a discount to its intrinsic value, which is $70 a share using a discounted cash flow model, the firm's analysts tells investors in a research note.
Davidson says the Bentonville, Ark., company also stands out due to its favorable market dynamics, dominant market position, and shareholder-oriented management. The firm affirmed a buy rating on the shares with a $69 price target.
Meanwhile, Evercore ISI added Walmart to the firm's "Tactical Outperform" list into the company's earnings report due on May 16.
Evercore sees first-quarter comparable-sales growth of 3.6% and profit of 53 cents a share as "attainable with potential for upside."
The firm says the company is executing at a high level and noted that Evercore analysts raised their Walmart comparable-sales and earnings outlook last week.
Evercore, which sees "near term upside to the mid-to-high $60's and an upwards bias to consensus expectations," has an outperform rating and $66 price target on Walmart shares.
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