Shares in Walmart (WMT:NYSE) climbed 3% to a new all-time high (20 Feb) of $181 after the big-box retail giant and retail bellwether bested Q4 sales and earnings estimates and raised its quarterly dividend by 9%, the most in a decade.

It was the best day for shares since November 2022 and takes the gains over the last year to nearly 20% compared with a 26% gain for the benchmark S&P 500 over the same period.

The earnings beat gave a boost to other retailers with shares of Target (TGT:NYSE) up 1.6% and Kroger (KR:NYSE) jumping 2.5%.

STRONG ECOMMERCE SALES 

Fourth quarter adjusted EPS (earnings per share) to the end of January unexpectedly rose 5% to $1.80 compared with consensus expectations of $1.65, driven by a 23% jump in ecommerce sales.

The company seems to be reaping the rewards of investments into its third-party market- place business where it packs and ships online orders for sellers.

Its delivery business drops off purchases made through major companies such as Home Depot (HD:NYSE) as well as local businesses. While the delivery business is not yet profitable, it is getting closer to breakeven.

Revenue increased 5.7% to $173.39 billion beating Street estimates of $170.71 billion. Chief financial officer John David Rainey said customers are putting fewer items in their baskets but shopping more frequently.

This is reflected in a 4.3% increase in the number of transactions while the average transaction value fell slightly.

Walmart is clearly dealing with elevated inflation levels better than most as families are drawn to its value proposition.

Looking forward the company is guiding for 2025 revenue growth in the 3% to 4% range which is a tad higher than analysts’ expectations according to Refinitiv data while adjusted EPS is anticipated to come in between $6.7 and $7.12.

The company also announced the acquisition of smart-tv maker Vizio Holding (VZIO:NYSE) for $2.3 billion or $11.50 per share, representing a premium of 47% to the undisturbed price.

Walmart plans to integrate Vizio’s hardware into its operating system so it can better target customers and grow its advertising business.

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Piper Sandler commented: ‘Walmart is using both value (strong price gaps) and convenience (ship from store) to take market share.’

Broker MKM Roth pointed out that Walmart is more than a bricks and mortar story of yesteryear: ‘Increased advertising opportunities and cost savings due to automation puts the company in a ‘unique’ position to attack market share and grow consumers for its ecosystem.’

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