Walmart Gains On Q3 Beat, Raised FY23 Outlook; Agrees To $3.1B Opioid Settlement Framework

Walmart Inc WMT reported third-quarter FY23 sales growth of 8.7% year-on-year to $152.81 billion, beating the consensus of $147.51 billion.
Net sales from Walmart U.S. increased 8.5% Y/Y, Walmart International rose 7.1%, and Sam's club jumped 12.8%.
Excluding fuel, Walmart's U.S. Q3 comp sales grew 8.2% and 17.4% on a two-year stack. eCommerce growth was 16% and 24% on a two-year stack.
Global advertising business grew over 30%, led by 40% at Walmart Connect in the U.S. and strength in Flipkart Ads.
The operating margin was 1.8%, and operating income for the quarter fell 53.5% to $2.7 billion.
The company held $11.6 billion in cash and equivalents as of October 31, 2022.
Cash provided by operating activities totaled $15.7 billion year-to-date, with a free cash flow of $3.6 billion.
Adjusted EPS was $1.50, beating the consensus of $1.32.
Inventories as of October 31, 2022, were $64.7 billion.
Subsequent to the third quarter, the company approved a new $20 billion share repurchase authorization replacing its existing authorization, which had approximately $1.9 billion remaining at the end of Q3.
Outlook: Walmart sees a Q4 FY23 adjusted EPS decline of 3% - 5%. Q4 net sales growth of 3%, negatively affected by about $1.3 billion from currency fluctuations.
For FY23, the company currently expects Adjusted EPS to decline 6.0% - 7.0% (prior view decline 9.0%-11.0%). Excluding divestitures, adjusted EPS decline of 5.0%-6.0% (previous view decline 8.0%-10.0%).
It expects FY23 consolidated net sales growth to be about 5.5% (prior view 4.5%). WMT sees U.S. comp sales growth, excluding fuel, of 5.5% (prior view 4%).
Opioid Settlement Framework: Walmart also agreed to a $3.1 billion nationwide opioid settlement framework designed to resolve substantially all opioid lawsuits and potential lawsuits by state, local, and tribal governments, if all conditions are satisfied.
Price Action: WMT shares are trading higher by 7.16% at $148.30 in premarket on the last check Tuesday.
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