Dow Jones big box retailer Walmart beat Q3 estimates early Thursday but Walmart stock tumbled after management provided a soft outlook. Rival Target on Wednesday reported a major earnings Q3 surprise, with TGT stock rising to the day's best performance on the S&P 500, its best gain in four years. TGT stock eased Thursday.
Walmart Earnings
Walmart growth slowed for the second quarter in a row, with adjusted earnings increasing 2% to $1.53 per share on 5.2% total revenue growth to $160.8 billion.
Analysts polled by FactSet expected earnings of $1.52 per share on $159.65 billion in revenue.
Net sales from customer purchases rose 5.3% to $159.44 billion while membership revenue and other income ticked up 1.6% to $1.37 billion.
Comparable sales excluding fuel increased 4.7% across all U.S. locations. Same-store sales at Walmart U.S. stores climbed 4.9%, down sharply from 8.2% growth last year. Sam's Club comparable sales increased 3.8%, decelerating from a 10% gain for the period in 2022.
Walmart CEO Doug McMillon noted strong revenue growth across all company segments for the quarter. Thanksgiving meal prices will also be lower this year compared to last year. "We're excited to get an early start to the holiday season," McMillon wrote.
Outlook
Meanwhile, Walmart customers are making trade-offs to afford products they want due to the sustained high costs for necessities, CFO John Rainey said in the earnings call. Weekly store performance has varied between holiday events in the U.S. with softer sales in the second half of October, Rainey said, bucking the positive trend from the rest of the quarter. Sales have turned higher during November but are still somewhat uneven, making the company more cautious about consumer spending, according to Rainey.
"We still expect sales growth to moderate in Q4 versus prior quarters, as grocery inflation further normalizes towards historic levels," Rainey said. "But we're encouraged by the increase in traffic and share gains we've seen and expect them to continue."
The company "may be managing through a period of deflation in the months to come," McMillon warned during the call. "And while that would put more unit pressure on us, we welcome it, because it's better for our customers."
Walmart guided expectations for consolidated net sales growth to a 5% to 5.5% gain for fiscal 2024, with adjusted earnings targeted between $6.40 and $6.48 per share. The Dow Jones giant reported 2023 full-year earnings of $6.29 per share on $605.9 billion in net sales.
FactSet analysts expect FY2024 earnings of $6.50 per share on 5.3% net sales growth to $638.16 billion.
Walmart earnings growth slowed to 4% for Q2 2024 results after two quarters of accelerating, double-digit gains
Walmart Stock
WMT stock fell about 8.1% Thursday, dropping out of a buy zone for a cup-with-handle base. Shares climbed 1.3% Wednesday to close 3% above the 164.33 buy point. A drop 7% to 8% below the entry to 152.82 would trigger the automatic sell rule.
Walmart stock is up 10.2% in 2023.
Target Earnings
Target on Wednesday reported a 36.4% earnings increase to $2.10 per share while total revenue declined 4.2% to $25.4 billion. Earnings were well above FactSet earnings forecasts of $1.47 per share. And results just beat revenue estimates of $25.3 billion.
The results marked Target's second earnings increase in a row after falling for six consecutive quarters.
Company-wide comparable sales declined 4.9% for the period, driven by a 6% drop in comparable digital sales. Same-store sales declined 4.6%.
Overall sales — Target's total from customer purchases — fell 4.3% to $25 billion.
CEO Brian Cornell noted in the release Target was able to deliver results despite a "very challenging external environment." Sales were consistent with company expectations while earnings came in well ahead of its own forecasts, due to efficiency and inventory management efforts.
For Q4, Target expects comparable sales in a "wide range" around a mid-single digit decline. The company guided earnings between $1.90 and $2.60 per share for the quarter.
FactSet analysts see Q4 earnings increasing 18% to $2.23 per share on a 1% revenue decline to $31.69 billion.
TGT Stock
Target stock inched lower Thursday after bolting 17.9% higher on Wednesday. Shares had been locked into a 24-month downtrend, and had fashioned a bottom off an early October low.
Wednesday's move marked Target's best gain since August 21, 2019 when the stock spiked 20.4%. The jump sent Target well above its 50- day moving average, pointing shares toward a test of resistance at the 200-day level.
TGT stock has tumbled 12.8% this year, through Thursday's close.
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