Walmart confirmed it will buy smart TV maker Vizio as it posted another strong quarter of sales growth amid a slight pullback by US consumers.
America’s biggest retailer reported fourth quarter results on Tuesday before market open that beat Wall Street expectations. Consumers turned to the retail chain for value over the holiday season, especially online, with ecommerce sales jumping 23% year-over-year to surpass $100 billion.
Shares of Walmart rose almost 3% Tuesday in premarket trading after the financial update, in which the retailer raised its annual dividend 9%.
CEO Doug McMillion said the company continued to gain share as it improved customer experience amid the “highest volume days leading up to the holidays.”
Walmart US same-store sales jumped 4.0% in the quarter, compared with Bloomberg consensus estimates of 3.12%. The rise was driven by more shoppers going to the store more frequently, but a slight drop in average ticket signaled they added less to their basket.
Per Placer.ai, foot traffic at the stores dipped 1.1% in Q4, but then improved at the end of December and turned positive in January. Walmart has seen an uptick in foot traffic in recent years after consumers, particular higher-income shoppers, began flocking to the value retailer for groceries in late 2022. Higher costs from inflation also benefitted the company.
For Q1 fiscal year 2025, the company expects consolidated net sales to grow in the range of 4.0% to 5.0%. Adjusted earnings per share are expected to come in between $1.48 to $1.56 pre-split and $0.49 to $0.52 post-split.
Walmart making further investments in digital, ads
Walmart is officially stepping up to complete with Amazon Prime.
The company announced plans to acquire the maker of connected TV platform Vizio for $2.3 billion, or $11.50 per share. The move should accelerate is retail media business, Walmart Connect, which grew 22% year-over-year in the US.
That’s slightly higher than the $2 billion the Wall Street Journal reported last week.
This will 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 prior to the announcement.
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 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.”
Earnings breakdown
Here’s what Walmart reported in its Q4 results, compared with Bloomberg consensus data:
Revenue: $173.4 billion versus $170.66 billion
Adjusted EPS: $1.80 versus $1.65
Same-store US sales growth: versus 3.4% versus 3.2%
Walmart US same-store sales: 4.0% versus 3.12%
Sam’s Club US same-store sales growth: 3.1% versus 2.99%
Walmart US e-commerce growth: 17.0% versus 15.49%
Here’s what Walmart was expected to report for its fiscal 2024, per Bloomberg consensus data:
Revenue: $648.1 billion versus $644.83 billion
Adjusted EPS: $6.65 versus $6.49
Same-store US sales growth: 6.0% versus 5.35%
Walmart US same-store sales: 5.6% versus 5.16%
Sam’s Club US same-store sales growth: 4.8% versus 4.75%
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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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