What's In The Cards For Walmart This Earnings Season?

As Walmart Inc. (WMT) prepares to release its fourth-quarter and full-year 2024 earnings on February 20, 2025, investors are eagerly anticipating the retail giant's performance. The company has been on a roll, with strong eCommerce sales growth and a focus on omnichannel strategies. Here's what to expect from Walmart's earnings season and how its investments in technology and global expansion are likely to impact its future growth prospects.



Earnings Expectations and Key Metrics

Analysts expect Walmart's earnings per share (EPS) to grow by 5.3% to $1.80, driven by strong eCommerce sales growth and improved customer experience metrics. Total revenue is projected to reach $173.4 billion, up 5.7% from the previous year. Walmart U.S. comp sales growth is expected to be 4.0% (excluding fuel), while Walmart International is expected to report net sales growth of 13.0% (constant currency). Sam's Club is projected to have comp sales growth of 3.1% (excluding fuel).

Drivers of Growth and Future Prospects

1. eCommerce Sales Growth: Walmart's eCommerce sales growth, particularly during the holiday season, is expected to have a significant impact on its overall revenue and earnings. The company crossed $100 billion in eCommerce sales for the year, driven by factors such as improved customer experience metrics, even during the highest volume days leading up to the holidays. Walmart's eCommerce sales growth is supported by various initiatives such as store-fulfilled pickup & delivery, advertising, and marketplace.
2. Omnichannel Strategy: Walmart's omnichannel strategy, which combines the best of online and in-store shopping experiences, is a key driver of its growth. The company is investing in technologies like AI and IoT to enhance its omnichannel capabilities, improve inventory management, and provide a more convenient and efficient shopping experience for customers. Walmart's investments in omnichannel services, such as express home delivery, pickup options, and cloud depots, are expected to drive increased sales and market share.
3. Global Expansion and Diversification: Walmart is expanding its presence in international markets, such as India, China, and Chile, by investing in e-commerce, omnichannel services, and local partnerships. This global expansion can help Walmart tap into new markets, increase sales, and drive earnings growth. In India, Flipkart Wholesale's digital marketplace connects local manufacturers to retail outlets, creating opportunities for small retail stores (kiranas) and micro-, small-, and medium-sized businesses (MSMEs) to grow during the pandemic. In China, Walmart has expanded delivery services with its partner JD Daojia in all cities where Walmart operates, offering one-hour delivery to every single one of its 400+ stores in the market.
4. Investments in Technology and Infrastructure: Walmart is investing in technologies like AI and IoT to enhance its operational efficiency, improve customer experience, and drive earnings growth in the long run. By leveraging data from various sources, Walmart can better understand customer behavior, preferences, and needs, enabling it to provide a more personalized and seamless shopping experience. Additionally, Walmart's investments in technology and infrastructure can help it optimize operations, reduce costs, and stay ahead of the competition.



Challenges and Risks

While Walmart's earnings season is expected to be strong, the company faces several challenges and risks that could impact its future growth prospects. These include:

1. Competition: Walmart faces intense competition from other retailers, both traditional and online, such as Amazon, Target, and Best Buy. These competitors are also investing in e-commerce, omnichannel services, and technology to stay ahead of the curve.
2. Economic Uncertainty: Economic uncertainty, such as inflation, rising interest rates, and geopolitical instability, can impact consumer spending and Walmart's sales. The company must navigate these challenges and adapt its strategies to maintain growth.
3. Regulatory and Compliance Issues: Walmart must comply with various regulations and standards, both domestically and internationally. Any compliance issues or regulatory changes could impact the company's operations and earnings.
4. Supply Chain Disruptions: Disruptions in the global supply chain can lead to increased costs, reduced availability of products, and slower growth for Walmart. The company must continue to invest in its supply chain and logistics to mitigate these risks.

In conclusion, Walmart's earnings season is expected to be strong, driven by its eCommerce sales growth, omnichannel strategy, and global expansion. The company's investments in technology and infrastructure are likely to contribute to its operational efficiency and earnings in the long run. However, Walmart must navigate several challenges and risks to maintain its growth and competitive edge in the retail industry. As investors await Walmart's earnings release, they can expect the company to provide valuable insights into its performance and future growth prospects.