Walmart beat Wall Street estimates for its fourth quarter as it pushed forward on physical store operations, e-commerce, membership and services.
In announcing its Q4 financials, the company revealed it agreed to acquire smart TV and streaming content provider Vizio for $11.50 per share in cash, equating to a fully diluted equity value of $2.3 billion. Walmart maintained the acquisition of Vizio and its SmartCast Operating System would enable it to connect with and serve customers in new ways, including by offering innovative television and in-home entertainment and media experiences. The deal also gives Walmart new means to help advertisers connect with customers, allowing brands to engage at scale and realize greater impact from their advertising spend with Walmart. The company added it expects the acquisition to further accelerate Walmart’s media business in the U.S.
In the fourth quarter, company net income was $5.49 billion, or $2.03 per diluted share, versus $6.28 billion, or $2.32 per diluted share, in the year-previous quarter. Adjusted for one-time events, diluted earnings per share were $1.80 versus $1.71 in the year-before period.
A Yahoo Finance-published analyst consensus estimate for adjusted diluted earnings per share came in at $1.64, while a revenue estimate came in at $170.71 billion.
Net sales were $171.91 billion and revenues, including membership and other income, were $173.39 billion versus $162.74 billion and $164.05 billion, respectively, in the year-prior quarter. Operating income was $7.25 billion versus $5.56 billion in the year-earlier period, while adjusted operating income on a constant currency basis was $7.11 billion versus $6.41 billion.
For Walmart U.S., net sales in the quarter grew to $117.64 billion from $113.74 billion year over year, while operating income advanced to $6.08 billion from $5.38 billion. Comparable sales without fuel impact gained 4%, with transactions up 4.3% and average ticket down 0.3% year over year. Walmart reported that the e-commerce contribution to comp was about 240 basis points.
At Sam’s Club, net sales in the quarter grew to $21.85 billion from $21.42 billion year over year, while operating income increased to $600 million from $500 million. Comps gained $3.1% sans fuel, with transactions up 3.6% and average ticket down 0.4%. E-commerce contribution to comp was about 190 basis points.
For the full fiscal year, company net income was $15.51 billion, or $5.74 per diluted share, versus $11.68 billion, or $4.27 per diluted share, in the year previous. Adjusted diluted earnings per share were $6.65 versus $6.29 per diluted share in the year before.
Net sales were $642.64 billion and total revenue was $648.13 billion versus $605.88 billion and $611.29 billion, respectively, in the year prior. Operating income was $27.01 billion versus $20.43 billion in the year-earlier, while adjusted operating income on a constant currency basis was $26.6 billion versus $24.6 billion.
In a conference call, Doug McMillon, Walmart president and CEO, said Walmart would push store and e-commerce growth while extending its media-related operation with the Vizio purchase and applying technology to meet its goals. McMillion, while saying he was pleased with the company’s quarterly performance, emphasized the company’s long-term strategy.
“My focus stays primarily on what we’re building for the longer term,” he said. “That future is an omnichannel one where we simultaneously strengthen our stores and clubs and build a more compelling e-commerce business.”
As for physical retail, McMillion noted Walmart is investing in remodels and supply chain automation to boost the customer experience as the company increases productivity. Plans call for 928 store and club remodels worldwide during the next year, with 650 of those stores in the U.S. He added Walmart will build some 30 new Sam’s Clubs during the next several years. Walmart will add 150 supercenters and Neighborhood Markets during the next five years as well, most of which will be new buildings, with a few being discount store conversions to supercenters where the company is relocating in the same community, according to the company.
On the e-commerce side of the business, McMillon particularly emphasized the opportunities its marketplace offers to expand Walmart’s reach and generate income through services the company offers sellers, including fulfillment, membership, advertising and data monetization. Walmart Marketplace and the income it delivers are helping Walmart grow its bottom line faster than its top line while delivering everyday low prices for customers and supporting investment in employees, McMillon added.
McMillan said the Vizio acquisition would allow Walmart to reach and serve customers in new ways while giving the company’s advertisers more comprehensive opportunities.
Walmart will continue to enhance its membership program. Walmart+ members spend almost twice as much with the company as nonmembers and buy more over the course of the year, McMillon said.
“Our team delivered a great quarter, finishing off a strong year,” McMillon said. “We crossed $100 billion in e-commerce sales and drove share gains as our customer experience metrics improved, even during our highest volume days leading up to the holidays. We’re proud of the team and excited about building on our momentum as we work to bring prices down for our customers and members.”
