Walmart recently made some impactful cuts in labor and infrastructure, but the box retailer is thriving following strong first-quarter earnings released on Thursday.
The stock market reacted accordingly, as Walmart’s share price was up 6.47% at $63.70.
Consolidated revenue was up 6.0% year over year at $161.5 billion, and consolidated gross margin rose 42 bps, led by the Walmart U.S. side. Comparable sales excluding gas for Walmart U.S. showed a 3.8% increase, while net sales came in at almost $109 billion.
Consolidated operating income increased 9.6% year over year at $600 million, and adjusted operating income increased 13.7%.
Led by store-fulfilled pickup/delivery and marketplace, Walmart’s ecommerce sales grew 21% vs. Q1 2024.
“Our team delivered a great quarter,” said Doug McMillon, Walmart’s president and CEO. “We’re people-led and tech-powered, and that combination is propelling our business.”
Strong results are expected to continue as the retailer forecasts a 3.5% to 4.5% increase in consolidated net sales during the second quarter and a 3.0% to 4.5% bump in consolidated operating income. For the year, consolidated net sales have been revised to high-end or slightly above the original guidance of an increase of 3.0% to 4.0%.
On the Sam’s Club side, net sales were up 4.6% in quarter one, and net sales excluding fuel rose by 5.3% year over year.
There was a record total membership and Plus increase, with a 13.3% year-over-year increase, and ecommerce sales up 18% in the same period, speaking to greater market penetration.
The good news was needed following a couple of weeks where Walmart showed signs of struggle.
On Tuesday, the Bentonville, Ark.-based retailer announced it was cutting hundreds of corporate positions and wants some workers to relocate. Walmart also called at-home workers back to the office.
In late April, Walmart announced it was closing all 51 of its Walmart Health clinics and discontinuing its telehealth operations.
“While we took a thoughtful and deliberate approach, the health center business was not sustainable for us,” Annie Patterson, a Walmart spokesperson, told Supermarket News.
The company said in a statement that it was unable to generate a profit from the business, citing the “challenging reimbursement environment,” as well as rising operating costs.
Drugstore operators have also cited reimbursement pressures as a significant obstacle to expanding their healthcare services, as both private and government insurance programs have been reluctant to pay for some services in these settings.
At the store level, however, Walmart created a huge hit behind the launch of the private-label brand Bettergoods in late April.
The line features around 300 grocery products ranging from $2 to $15, including frozen, dairy, snacks, beverages, pasta, soups, coffee, chocolate, and more.
Walmart said it is the largest private-label brand it has released in two decades “and the fastest food private brand Walmart has brought to market.”
“Today’s customers expect more from the private brands they purchase — they want affordable, quality products to elevate their overall food experience. The launch of Bettergoods delivers on that customer need in a meaningful way,” said Scott Morris, Walmart’s senior VP of private brands, food, and consumables, in a statement.
