Key Moments
- Kroger Co. (NYSE:KR) fell 5% as investors reacted to Walmart Inc. (NYSE:WMT) results and Kroger’s plans for broad price reductions.
- Walmart guided second-quarter adjusted EPS to a range of 72c to 74c, below the 75c consensus estimate.
- Kroger CEO Greg Foran said the company is preparing to test and roll out substantial price cuts to recapture share from rivals including Walmart.
Retail Stocks Move Lower on Walmart Update
Investing.com — Shares of major U.S. retailers came under pressure Thursday after Walmart Inc. (NYSE:WMT) issued an outlook that fell short of Wall Street expectations and commentary from Kroger Co.’s (NYSE:KR) chief executive highlighted looming price reductions in the grocery space.
Kroger stock dropped 5%, while Costco Wholesale (NASDAQ:COST) slipped 1% and Target (NYSE:TGT) fell 1.3%. Walmart shares were down 3% after its latest report and guidance, closing 2.9% lower on the session.
Walmart EPS Guidance Misses Street Expectations
Walmart’s forecast for second-quarter adjusted earnings per share came in below analyst projections. The retailer projected adjusted EPS of 72c to 74c, compared with a consensus estimate of 75c.
The company kept its full-year forecasts intact, but the Street’s estimate for adjusted EPS remains 7c above the upper end of Walmart’s guidance range. For the full year, Walmart is maintaining its outlook for net sales at constant currencies of +3.5% to +4.5% and adjusted EPS of $2.75 to $2.85, versus a consensus estimate of $2.92.
| Metric | Company Guidance / Result | Analyst Estimate / Consensus |
|---|---|---|
| Q2 adjusted EPS | 72c – 74c | 75c |
| Full-year adjusted EPS | $2.75 – $2.85 | $2.92 |
| Full-year net sales growth (constant currencies) | +3.5% to +4.5% | Not specified |
Walmart’s First-Quarter Performance
For the first quarter, Walmart reported adjusted EPS of 66c, in line with expectations. Revenue reached $177.75 billion, increasing 7.3% year-over-year and surpassing the $175.06 billion estimate.
Walmart-only U.S. stores comparable sales excluding gas rose 4.1%, slightly above the 4% estimate. Sam’s Club U.S. comparable sales excluding gas advanced 3.9%, beating the 3.59% estimate.
| Walmart Q1 Metric | Reported | Estimate |
|---|---|---|
| Adjusted EPS | 66c | 66c |
| Revenue | $177.75 billion | $175.06 billion |
| Walmart U.S. comps ex-gas | +4.1% | +4% |
| Sam’s Club U.S. comps ex-gas | +3.9% | +3.59% |
The company recorded strong digital momentum, with eCommerce sales jumping 26%, significantly ahead of the 18.6% estimate. Growth was attributed to store-fulfilled pickup and delivery as well as its marketplace operations. In Walmart U.S., transactions increased 3%, while the average ticket grew 1.1%.
Kroger Plans Broad-Based Price Cuts
Sentiment around the grocery sector was further affected by remarks from Kroger CEO Greg Foran, who took over the role in February. He told Bloomberg News that Kroger is working on initiatives to test and roll out meaningful price reductions across multiple product categories.
The strategy is aimed at helping the largest U.S. grocery company reclaim market share from competitors, including Walmart, where Foran previously held a leadership position.
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