Walmart (WMT) Q1 Earnings Preview: Inflation Works?

Over the last few months, retail giant Walmart (NYSE: WMT) has successfully proven to investors its resilience and firm-positioning in the face of macro uncertainty. The company is on track to deliver its 26th consecutive quarter of positive traffic, circumventing the supply chain woes and cost pressures as demand remains incredibly strong. Equally, as consumer prices increase, shoppers are pressured to look more towards budget-first suppliers like Walmart, meaning inflation can work in the company’s favor. 

It's a cloudy picture for retailers. Ongoing logistical disruptions, soaring fuel costs and the labor shortage have all resulted in the fastest jump in consumer prices in four decades – which seems to give Walmart a shiny edge over its competitors. As cost-conscious shopping increases, Walmart is well-positioned with its attractive pricing; helped by the company's omnichannel focus which is breeding a whole new level of digital penetration.

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Investors will want to pay particular attention to Walmart’s rapidly expanding e-commerce strategy, which might well be hot on the heels of digital giant Amazon.com. Online sales have expanded 87% over the last two years, gaining traction quickly as digital channels become quick favorites for shopping. The company hopes to have 200M products listed on Walmart.com by the end of the year, up from 170M currently. 

Walmart has a pattern of defying typical market trends, relying on its robust business model to deliver solid quarterly growth. Solid, consistent demand will be a continued feature of Walmart earnings, but investors should pay keen attention to expansion in digital avenues, as this is likely a prominent future angle for uncapped revenue growth. For successfully navigating supply chain disruption and using inflation as an attractive angle, WMT shares definitely warrant your attention.