Wal Mart, the global retail giant, plans to expand its advertising business.
Before the US stock market on February 20 local time, Wal Mart (NYSE: WMT) released the fourth fiscal quarter and annual financial statements of fiscal year 2024 as of January 31, 2024. In the fourth fiscal quarter, Wal Mart's total revenue reached 173.388 billion US dollars, higher than market expectations, with a year-on-year growth of 5.7%; The net sales revenue was 171.914 billion US dollars, a year-on-year increase of 5.6%; The net profit attributable to shareholders was $5.494 billion, a year-on-year decrease of 12.4%. In fiscal year 2024, Wal Mart's total revenue will be $648.125 billion, up 6% year on year; The net sales revenue was 642.637 billion US dollars, a year-on-year increase of 6.1%; The net profit was 15.511 billion US dollars, a year-on-year increase of 32.8%.
Wal Mart performance
Wal Mart also released guidance for fiscal year 2025 in its financial report. The consolidated net sales for the first quarter of fiscal year 2025 are expected to increase by 4% to 5% year-on-year, and the consolidated revenue is expected to increase by 3% to 4.5% year-on-year. The annual consolidated net sales for the fiscal year 2025 are expected to increase by 3% to 4% year-on-year, and the consolidated revenue is expected to increase by 4% to 6% year-on-year.
On February 20, the Board of Directors of Wal Mart also approved the annual cash dividend for fiscal year 2025, increasing the annual dividend for 51 consecutive years, paying 0.83 dollars per share after share splitting, or 2.49 dollars per share before share splitting, an increase of about 9% over the previous fiscal year's 2.28 dollars per share, the highest increase in more than a decade.
In terms of performance data, all businesses of Wal Mart achieved year-on-year growth. In the fourth fiscal quarter, Wal Mart's US sales volume was 117.6 billion US dollars, up 4% year on year; Wal Mart's international net sales reached 31.2 billion US dollars, up 13% year on year; Sam's Club (USA) had sales of $21.9 billion, a year-on-year increase of 3.1%. In fiscal year 2024, Wal Mart's sales in the United States were $441.8 billion, up 5.6% year on year; Wal Mart International's net sales were $111.7 billion, up 10.6% year on year; Sam's Club (USA) achieved sales of $86.2 billion, a year-on-year increase of 4.8%;
It was mentioned in the financial report that Wal Mart's international sales increased by 10% in the fourth fiscal quarter, which was also supported by the Chinese market and showed a strong performance in the festival activities. The e-commerce sales of Wal Mart's international business increased by 44% year on year, and the e-commerce penetration rate reached 25% for the first time. In addition, Wal Mart International opened 110 new stores this quarter.
The Chinese market still performs strongly. The net sales of Wal Mart China in the fourth fiscal quarter were $4 billion, up 11.3% year on year, and the comparable sales increased 6.6%, with a slowdown in growth compared with the previous quarter. The net sales of e-commerce business increased by 11%, with a slowdown in growth compared to the previous month.
Wal Mart's performance in China
The Sam's format and e-commerce business in the Chinese market continue to perform strongly, but due to the late Spring Festival this year compared to last year, it has had a certain impact on sales growth rate. During the fourth fiscal quarter, Wal Mart China's gross profit margin was relatively stable, and e-commerce distribution costs were further reduced. In the fourth quarter, the overall operating rate decreased and the operating revenue increased. The overall e-commerce penetration rate of Wal Mart in China is 48%.
The financial report also mentioned that pricing will continue to be managed to align with competitive historical price gaps, and lower prices will be achieved through inventory management.
In recent years, membership based supermarkets like Sam's have flourished in the Chinese market, while traditional Chinese supermarkets have not yet emerged from their predicament. Sam revealed that he will continue to expand his investment in China and strengthen the construction of omnichannel platforms in the future.
Wal Mart executives also mentioned the price fluctuation of products on the conference call. Doug McMillon, president and CEO of Wal Mart, said on the financial report conference call that the prices of general commodities, including clothing, were lower than a year ago, and even some commodities were lower than two years ago. John David Rainey, executive vice president and chief financial officer of Wal Mart, said that the current possibility of deflation seems to be small. "The possibility still exists, but the price is more stable than three months ago."
It is worth noting that this large retailer is ready to develop its advertising business.
On February 20 local time, Wal Mart announced that it would acquire Vizio, a smart TV manufacturer, for $2.3 billion ($11.5 per share), accelerating the expansion of Wal Mart's media business in the United States, Walmart Connect, and further enhancing its appeal to advertisers.
According to the announcement, Walmart Connect grew by 30% in the fiscal year 2024, with a higher profit margin than selling groceries or clothing. Seth Dallaire, executive vice president and chief closing officer of Wal Mart America, said that the acquisition was expected to enable profitable advertising business to expand rapidly. In addition, John David Rainey, Wal Mart's executive vice president and chief financial officer, said in an interview with foreign media that the acquisition of Vizio would become a catalyst for the high profit and rapid growth of Wal Mart's business.
According to reporters, in June 2016, Chinese company LeTV announced that it would acquire Vizio, a large domestic television manufacturer in the United States, for $2 billion as an important means of entering the US market. But this transaction was not completed at the time, and in April 2017, LeEco abandoned the acquisition and will seek other ways of cooperation, even reaching the stage of litigation.
In recent years, on the one hand, Wal Mart has attracted families of different income levels to shop, on the other hand, it is also seeking to turn to businesses with higher profits, including advertising. According to this financial report, Wal Mart's global advertising revenue increased by 33% in the fourth quarter. In the fiscal year 2024, global e-commerce sales exceeded $100 billion for the first time, an increase of 23% year-on-year. Global advertising revenue increased by 28% year-on-year to $3.4 billion, and global membership revenue exceeded 20%.
In addition, according to foreign media reports, Wal Mart's e-commerce business has not yet achieved profitability. But the CFO stated that they are approaching profitability as the company places more packages on each delivery route and sells related services such as online advertising, resulting in a 20% decrease in delivery costs over the past year.
As of the closing of US stocks on February 20, Wal Mart reported $175.86 per share, up 3.23%.