Walmart tops estimates but issues cautious outlook for current fiscal

Bloomberg

Walmart Inc turned in another blowout quarter as more shoppers sought out its low prices, but the retailer offered a cautious outlook for the current fiscal year because of rising economic uncertainty.
Consumers are getting squeezed as interest rates climb and savings rates fall, Walmart Chief Financial Officer John David Rainey said. That threatens spending even as the company contends with pressures of its own, such as higher interest expense, taxes and the impact of its purchase of full ownership of a South African retailer and a US automation provider.
“Our value proposition is certainly resonating with consumers right now, but there’s a lot of macroeconomic uncertainty,” Rainey said in an interview with Bloomberg TV. “We’re adopting a cautious outlook and we want to make sure we’re responsive to whatever environment we’re going to find ourselves in.”
The outlook sets a relatively low bar and opens a potential path for Walmart to exceed expectations as the year goes on, particularly if it continues to grab more market share.
The retailer has put last fiscal year’s profit-sapping inventory surge behind it, and Wall Street analysts are already suggesting that Walmart has room to reward investors with pleasant surprises later on.
The company’s “guidance looks conservative and sets an appropriate baseline to over-deliver,” Morgan Stanley analyst Simeon Gutman said in a note to clients. “The guide looks conservative on sales and appears to be extrapolating current margin headwinds into next year. Overall, we think the earnings bar is being set reasonably given an uncertain backdrop.”