Walmart misses earnings expectations for first quarter

Walmart-backed Flipkart managed to register strong performance for Q1 of FY 2023, said executives during the US-based retail giant’s first quarter earnings call. Outgoing Chief Financial Officer Brett Biggs said that Flipkart was registering good revenues from its advertising platform business.

CEO of Walmart, Doug McMillon said that PhonePe, which was hived-off from Flipkart in 2020, had also recorded strong growth, reaching the 100 million transactions per month mark in April 2022, and with an annual total payment value (TPV) of $780 billion. TPV denotes the total value of transactions processed over the platform during a particular period of time.

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He also mentioned the acquisition of online pharmacy marketplace, SastaSundar, and Flipkart’s foray into the sector with the launch of Flipkart Health+ as highlights of the quarter. 

Overall, Walmart registered total revenue of $141.6 billion, up 2.4 percent year-on-year for the first quarter ending April 30 for FY 2023. Operating income for the period fell by 23 percent year-on-year to $5.3 billion from $6.9 billion in the corresponding quarter in FY 2022. 

The company missed its earnings expectations for the quarter due to cost pressure from fuel price rise, high inventory levels and overstaffing as employees got back from COVID-19 exigencies by February. 

CEO Doug McMillon said, “Bottomline results were unexpected and reflect the unusual environment. US inflation levels, particularly in food and fuel, created more pressure on margin mix and operating costs than expected.”

He also added that food inflation had led to change in customer behaviour. Food costs rose by 9.4 percent in April, 2022 on a year-on-year basis in the US. 

Walmart International recorded net sales of $23.8 billion, down 13 percent from the year ago period. The business was negatively affected by Walmart’s sale of its UK and Japan operations as well as from currency fluctuations.