Walmart tallied robust sales gains, including strong U.S. comparable-sales growth, for its fiscal 2021 fourth quarter and year, despite missing Wall Street’s adjusted earnings forecast and posting a quarterly GAAP net loss.
For the 14-week fourth quarter ended Jan. 31, Walmart totaled revenue of $152.08 billion, up 7.3% from $141.67 billion a year earlier, the Bentonville, Ark.-based retail giant said Thursday. In constant currency, revenue rose 7.5% to $152.33 billion.
Full-year 2021 revenue, covering 53 weeks, climbed 6.7% to $559.15 billion from $519.93 billion in fiscal 2020, Walmart said. Revenue in constant currency came in at $564.2 billion, a gain of 7.7%.
At Walmart U.S., fourth-quarter net sales rose 7.9% to $99.59 billion from $92.27 billion a year earlier. Comparable-store sales were up 8.5% (8.6% without fuel). The average ticket size swelled 21.9% as the transaction count contracted by 10.9%, reflecting a retail industry trend of fewer but larger purchases during the COVID-19 pandemic. E-commerce sales jumped 69% year over year at the top line and gained 6.2% on a comparable basis.
Overall net sales at Walmart U.S. in fiscal 2021 were $369.96 billion, up 8.5% from $341 billion in 2020. Comp-store sales rose 8.5% (8.6% without fuel), while e-commerce sales grew 79%.
Fiscal 2021 comparable-sales results cover 13- and 52-week periods for the fourth quarter and full year.
Warehouse club subsidiary Sam’s Club turned in even stronger gains. Fourth-quarter sales increased 8.1% to $16.53 billion from $15.29 billion a year ago. Comparable-club sales advanced 8.5%, but the uptick was 10.8% excluding fuel. The number of transactions climbed 8.4%, while ticket size grew 2.2. E-commerce sales jumped 42% at the top line and 2.8% on a comparable basis. Walmart noted that lower tobacco sales negatively affected comp results by about 410 basis points, while membership income gained 12.9%, the strongest growth in six years.
Sam’s Club chain finished fiscal 2021 with net sales of $63.91 billion, up 8.7% from $58.79 billion in 2020. Comp sales gained 8.4% year over year and, excluding fuel, were up 11.8%. The company didn’t disclose e-commerce sales growth for the year. Reduced tobacco sales negatively affected comp sales by about 400 basis points. Membership income rose 9.4% for the year.
Walmart International saw a 5.5% uptick in net sales to $34.87 billion in the fourth quarter. In constant currency, net sales were up 6.3% to $35.13 billion. Fiscal 2021 international net sales edged up 1% to $121.36 billon but, in constant currency, rose 5.2% to $126.38 billion, Walmart said.
“This is a time to be even more aggressive because of the opportunity we see in front of us." — Doug McMillon, Walmart CEO
“We completed a strong year and a strong Q4, thanks to our amazing associates. They stepped up to serve our customers and members exceptionally well during a busy holiday period in the midst of a pandemic,” Walmart President and CEO Doug McMillon said in a statement. “Change in retail accelerated in 2020. The capabilities we’ve built in previous years put us ahead, and we’re going to stay ahead. Our business is strong, and we’re making it even stronger with targeted investments to accelerate growth.”
Those investments include wage increases that will lift associates’ average hourly pay to over $15 an hour, Walmart said. Plans call for the company to raise wages for another 425,000 frontline associates following hikes for 165,000 associates in the fall, aimed at improving the customer experience, according to McMillon.
Fiscal 2022 capital investments are projected at almost $14 billion to build supply chain capacity and automation in distribution centers, fulfillment centers and market fulfillment centers to drive productivity and spur sales and profit growth, Walmart reported. At the front end, capital outlays also will fuel expansion of online delivery and pickup services as well as digital shopping enhancements to create a more seamless experience, deepen customer relationships and boost share of wallet, the company said, describing its strategy as the retailer’s “next-generation business model.” Other investments will focus on ancillary businesses with “accretive margins,” such as marketplace, advertising, financial services and data monetization.
“This is a time to be even more aggressive because of the opportunity we see in front of us,” McMillon added. “The strategy, team and capabilities are in place. We have momentum with customers, and our financial position is strong.”
At the bottom line, Walmart reported a GAAP consolidated net loss of $2.09 billion in the fiscal 2021 fourth quarter, or 74 cents per diluted share, compared with $4.14 billion, or $1.45 per diluted share, a year ago. Consolidated net earnings for fiscal 2021 on a GAAP basis came in at $13.51 billion, or $4.75 per diluted share, down from $14.88 billion, or $5.19 per diluted share, in 2020.
Walmart said the loss on sale of its Seiyu operations in Japan and Asda grocery chain in the United Kingdom negatively impacted fiscal 2021 fourth-quarter and full-year earnings per share (EPS) by $2.60 and $2.93, respectively. The approximately $8.8 billion sale of a majority stake in Asda to EG Group founders the Issa brothers and U.K. private-equity firm TDR Capital was completed on Feb. 16. Walmart also recorded a 6-cents-per-share (diluted) charge in both periods for officer compensation as well as full-year per-share charges of 13 cents for business restructuring and 6 cents for discrete tax items.
The retailer also noted that its decision to repay property tax relief in the U.K. lowered fourth-quarter GAAP and adjusted EPS by 7 cents, and COVID-related costs totaled $1.1 billion in the quarter. In a research note, Jefferies analyst Stephanie Wissink estimated that Walmart had $500 million additional pandemic-related expenses than expected, which translated to a negative impact of 14 cents on adjusted EPS.
Walmart said adjusted net earnings per share were $1.39 in the fiscal 2021 fourth quarter versus $1.38 a year earlier. Analysts, on average, had projected fourth-quarter adjusted EPS of $1.51, with estimates ranging from a low of $1.40 to a high of $1.74, according to Refinitiv.
Wall Street’s consensus fiscal 2021 forecast was for adjusted EPS of $5.59, with projections running from a low of $5.36 to a high of $5.82. On an adjusted basis, Walmart reported full-year EPS of $5.48 compared with $4.93 a year ago.
Walmart is lifting hourly wages for frontline associates to over $15, with another 425,000 workers up next to receive increases following raises for 165,000 associates in the fall.
Walmart closed out fiscal 2021 with 11,443 stores overall. As of Jan. 31, that number included 4,743 Walmart U.S., 599 Sam’s Club and 6,101 international locations. The company had ended fiscal 2020 with a total of 11,503 stores worldwide, including 4,756 Walmart U.S., 599 Sam’s Club and 6,148 international locations.
“Our associates responded unbelievably to serve customers in one of the most challenging times we’ve faced. We have tremendous momentum, having just completed a year with record sales and operating cash flow,” Walmart Chief Financial Officer Brett Biggs stated. “We accomplished this while accelerating our long-term strategy of transforming Walmart into a dynamic omnichannel business. It’s now time to accelerate even more.”
Looking ahead to Walmart’s 2022 fiscal year, Jefferies’ Wissink reckoned that about 30% of the retailer’s roughly 1.5 million U.S. employees are due for a wage boost. “Importantly, Walmart is guiding overall company operating income to grow slightly (ex-divestitures) and the U.S. to grow consistent with positive low-single-digit comps inclusive of these wage headwinds, implying the underlying business via mix benefits, e-commerce profit improvements and leverage will fully offset the wage headwinds,” she explained in her research note. “This is meaningfully greater advancement in the core than we had expected.”
A theme of “people plus digital” has emerged as Walmart’s strategic focus for fiscal 2022, according to Wissink. “Not surprisingly, fiscal 2022 reflects stepped-up investments in people and digital. Walmart already has a meaningful proximity advantage. Most intriguing to us is a still undertapped value source: data,” she wrote. “Walmart+ (high-frequency customer data) and Walmart Connect (sophisticated ad platform) are significantly underappreciated.”
