Actually, Walmart's Q1 Report Was Better Than It Seems

Core Viewpoint - The market's initial bearish reaction to Walmart's Q1 earnings report overlooks significant positive aspects of the company's performance and growth potential [2][3][16] Financial Performance - Walmart reported Q1 sales of $165.61 billion, with a per-share operating profit of$0.61, exceeding expectations of $165.84 billion and$0.58 per share, representing a 4% year-over-year growth [4] - Same-store sales in the U.S. grew by 4.5%, slightly down from the previous quarter's 4.6% [4] - Operating income increased by 4.3% year-over-year, while overall revenue grew by 2.5% [9] E-commerce Growth - E-commerce sales grew by 22% year-over-year, accelerating from 16% in the previous quarter [6] - Walmart Connect's advertising revenue in the U.S. increased by 31%, up from 24% growth in the previous quarter [7] Cost Management - Walmart's cost of sales and operating expenses grew in line with sales, indicating effective cost management [9] - The decline in GAAP pre-tax net income was primarily due to a $1.4 billion swing in "other gains and losses," which do not reflect operational performance [10] Tariff Impact and Supply Chain - Concerns about new tariffs potentially increasing retail prices are acknowledged, but Walmart's management may be setting low expectations [11] - Over half of the goods sold in Walmart's U.S. stores come from China, but two-thirds of inventory spending is on U.S.-made products, indicating a diversified supply chain [14] - Walmart's scale and focus on groceries, which account for over half of total sales, provide a competitive advantage [15] Market Reaction - Initial investor panic following the Q1 report and second-quarter outlook is deemed an overreaction, as the company's fundamentals remain strong [16]