Walmart Inc.
According to its earnings transcript, 75% of Walmart's market share growth stemmed from "households earning more than $100,000," said the company's CEO, Doug McMillon.
What Happened: Sales were at $169.59 billion, up 5.5% year over year or 6.2% (at constant currency), beating the consensus of $167.72 billion. The gross margin rate was up 21 bps to 24.2% aided by improvement in the Walmart U.S. Operating income was up by $0.5 billion or 8.2% year over year at $6.7 billion.
Global eCommerce sales rose 27%, driven by store-fulfilled pickup and delivery as well as marketplace growth. Global advertising business grew 28%, including 26% for Walmart Connect in the U.S.
"We're seeing higher engagement across income cohorts with upper-income households continuing to account for the majority of our share gains," said the chief financial officer, John David Rainey.
Why It Matters: When asked if this theme of engagement by upper-income level households was valid across all categories and dimensions of the business, CEO Doug McMillon replied, "We want to sell grocery and general merchandise. And if you go through and look at it categorically, by income level, it kind of plays out the same way."
"People come to us to shop as a primary destination in many instances and then they give us feedback across categories. and if you look at our offer in food and consumables, our shares are pretty high and consistent relative to some of the things we see in general merchandise," he added.
However, McMillon added that despite a strong market share in aforementioned categories, along with sections like toys, bicycles, Walmart "had a lower market share in a lot of the fashion categories. And that's basically just the customer telling us over the years, I'd rather buy my apparel somewhere else."
Price Action: On a year-to-date basis, the Walmart stock has risen over 63% beating the 17% gains in the NYSE Composite Index, according to Benzinga Pro data.
JP Morgan analyst Christopher Horvers said that similar to prior quarters, Walmart maintains a prudent forecast despite consistent outperformance. Horvers adds that the ongoing share gains and upward revisions strengthen the bullish case despite FX headwinds and limited SG&A leverage. Supporting their "overweight" rating, the analyst added that strong U.S. and international gross margin trends drive structural profitability improvements.
According to Benzinga Pro data, based on an average price target of $97.67 between Telsey Advisory Group, Piper Sandler, and BMO Capital, there's an implied 13.24% upside for Walmart Inc. from these most recent analyst ratings. The consensus rating forecast on Benzing pro, suggests a score of 4.3 out of 5 points, which implies buying the stock.
