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Walmart expected to grow its sales again as it reportedly explores a buyout of Vizio

In Business
February 20, 2024

Walmart is expected to post another strong quarter of sales growth, but the notion of a resilient consumer seems to be losing steam.

America’s biggest retailer is set to report its fourth quarter results on Tuesday. US same-store sales are expected to jump 3.2%, based on Bloomberg consensus data, a sharp drop from the 8.8% growth it clocked this time last year.

Per Placer.ai, its stores’ foot traffic dipped 1.1% in Q4, but then improved at the end of December and turned positive in January.

For the full fiscal year, US same-store sales are expected to increase 5.35% after consumers, particularly higher-income shoppers, began flocking to the value retailer for groceries in late 2022.

“We expect grocery share gains & trade-down to continue supporting Walmart’s store and online transactions as consumers continue to manage grocery inflation,” Bank of America analyst Robert Ohmes wrote in a client note.

Telsey Advisory Group senior managing director Joe Feldman told Yahoo Finance that all eyes are on the grocery business and any shift to discretionary spending this quarter. Investors should also watch out for the return of operating profits growing faster than sales, which implies margin expansion.

Last quarter, Walmart CEO Doug McMillon noted a “pressured consumer” as the company gave soft guidance for the rest of 2023. It raised its full-year earnings per share outlook to $6.40-$6.48, higher than its previous guidance of $6.36-$6.46, but lower than the $6.48 that was expected at the time.

Shares of Walmart hit a record high on Friday ahead of the earnings report and its 3-for-1 stock split.

Walmart making further investments in digital, ads

This earnings report comes as the retail giant is looking to compete with Amazon Prime.

Walmart is reportedly in talks to acquire TV maker and video platform Vizio for $2 billion, per the Wall Street Journal.

If the deal comes through, it would allow Walmart to “leverage TV viewership data” to market its products across its ecosystems. It could also offer direct e-commerce sales on the connected TV platform — a “massive opportunity” as consumers continue cord cutting — and would allow the retailer to gain additional data on its viewers and customers, Wedbush analyst Alicia Reese wrote in a client note.

Feldman said the consumer data “is quite valuable” as Walmart looks to grow its ecosystem, especially its Walmart+ membership platform.

Walmart is “trying to build something like an Amazon Prime; this could be a way towards doing that,” added Feldman. However, he’s skeptical about the price that Walmart is reportedly willing to pay, and what this could mean for other retailers that sell Vizio TVs, like Costco, Target, and Best Buy.

But Walmart has a track record of taking some risks with acquisition, including Jet.com (eventually discontinued), Flipkart (not yet profitable), and Moosejaw and Bonobos (later resold).

This could be another example of Walmart’s “interest in learning and growing its digital capabilities while clearly [being] willing to take some flyers,” JPMorgan analyst Chris Horvers said in a note to clients.

Horvers does not believe the deal would raise antitrust concern, given “consumer electronics is one of the most competitive markets in the world” and Walmart’s private-label TV brand “does not have anywhere near the share of Samsung, TCL, LG, etc.”

Miami, Hialeah Gardens, Florida, Walmart Supercenter, customer in fresh produce aisle, salad bags vegetables. (Photo by: Jeffrey Greenberg/Universal Images Group via Getty Images)

A customer in the produce aisle of a Walmart Supercenter in Miami, Fla. (Jeffrey Greenberg/Universal Images Group via Getty Images) (Jeff Greenberg via Getty Images)

Earnings breakdown

Here’s what Walmart is expected to report for its Q4 results, per Bloomberg consensus data:

Revenue: $170.66 billion

Adjusted EPS: $1.65

Same-store US sales growth: 3.20% expected

Walmart US same-store sales: 3.12%

  • Traffic: 2.30%

  • Ticket: 1.16%

  • E-commerce growth: 2.08%

Sam’s Club US same-store sales growth: 2.99%

Walmart US e-commerce growth: 15.49%

Here’s what Walmart is expected to report for its fiscal 2024, per Bloomberg consensus data:

Revenue: $644.83 billion

Adjusted EPS: $6.49

Same-store US sales growth: 5.35%

Walmart US same-store sales: 5.16%

  • Traffic: 2.45%

  • Ticket: 2.17%

  • E-commerce growth: 2.68%

Sam’s Club US same-store sales growth: 4.75%

Walmart US e-commerce growth: 20.59%

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].

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