Wall Street analysts are out in force issuing guidance on Walmart’s fiscal 2022 fourth-quarter results due before the bell Thursday (Feb. 17). As for expectations, it’s a mixed bag.
Chief among factors impacting the mega-retailer’s fiscal year-end performance are the supply chain, logistics and labor issues that have dogged retail throughout a stop-and-go recovery.
With inflation at a 40-year high, the chain’s “Everyday Low Price” guarantee is seen as a strength by Walmart itself, while market watchers wonder at the impact on actuals.
Reuters quoted Capital Wealth Planning Lead Portfolio Manager Josh Smith as having said, “In an inflationary environment, we think that … there is going to be a significant margin pinch at Walmart.”
The same piece said digital advertising may soften the blow of a sales slowdown, noting that “Walmart sells digital ad space to consumer product companies and other major advertisers, through Walmart Connect, launched in late January 2021. Keybanc analysts expect Connect to earn over $3 billion in pre-tax earnings over time, helping Walmart offset higher costs.”
Walmart’s maneuverings in the healthcare space also stand to bolster earnings as more consumers grow comfortable receiving care in store settings.
The retailer began opening Walmart Health in-store clinics in 2019 and has applied for medical licenses in at least 37 states, according to multiple reports. The company acquired telehealth platform Telehealth Provider MeMD in Q2 2021 to extend the reach of Walmart Health.
Walmart also teamed with Health at Scale in January to leverage the company’s machine learning and artificial intelligence (AI) tech to help insured Walmart employees find a doctor.
Read more: Healthcare Personalization Gets Boost From Walmart
Continuing on its omnichannel path, Walmart began testing interactive in-store elements in its Springdale, Arkansas, store. A company blog post stated, “In this next phase of our redesign, we’re amplifying the physical, human and digital design elements in our stores to inspire customers and elevate the experience.”
See more: Walmart Debuts Interactive Store Dubbed ‘Time Well Spent’
Enhancements include greater use of digital signage, QR codes and innovative lighting.
Not to be overlooked are comparisons with archrival Amazon. Both companies are in a slugfest for market share, with grocery subscriptions, healthcare and home delivery big battlegrounds.
Seen as a response to Walmart’s aggressive healthcare moves, Amazon Care was announced Feb. 9 with a city-by-city rollout that will put its clinics in direct competition with Walmart’s.
In January, Walmart announced that its InHome grocery delivery service is expanding massively this year. In a press release, the company laid out plans to “scale the service, going from InHome being available to 6 million households to making it accessible to 30 million U.S. households by the end of the year. To support the expansion, Walmart plans to hire more than 3,000 associate delivery drivers this year as well as build out a fleet of 100% all-electric delivery vans.”
InHome subscribers get the same benefits as Walmart+ subscribers, and the program complements the Walmart GoLocal white-label delivery service for small businesses.
Amazon Prime raising its monthly membership to $14.99 versus Walmart+ at $12.95 may weigh positively on the 2022 outlook.
See also: Waiting on Earnings, Betting on Health