Walmart posts Q4 earnings beat, to buy Vizio in $2.3 billion deal
Consumers turned to the retail chain for value over the holiday season.
Investors are tuning into some retail dealmaking.
Walmart (WMT) confirmed it will buy smart TV maker Vizio (VZIO) on Tuesday as it posted another strong quarter of sales growth amid a slight pullback by US consumers.
America's biggest retailer reported fourth quarter results before the market open that beat Wall Street's expectations. Consumers turned to the retail chain for value over the inflationary holiday season, especially online, with e-commerce sales jumping 23% year over year to surpass $100 billion.
Shares of Walmart rose more than 5% on Tuesday in early trading after the financial update, in which the retailer raised its annual dividend by 9%.
CEO Doug McMillon said the company continued to market gain share as it improved customer shopping experiences during the "highest-volume days leading up to the holidays."
Walmart US same-store sales jumped 4% in the quarter, compared with Bloomberg consensus estimates of 3.12%. The rise was driven by more shoppers going to the store more frequently, but a slight drop in average ticket size signaled they added less to their basket.
Per Placer.ai, foot traffic at the stores dipped 1.1% in Q4 but then improved at the end of December and turned positive in January. Walmart has seen an uptick in foot traffic in recent years after consumers, particularly higher-income shoppers, began flocking to the value retailer for groceries in late 2022. Higher costs from inflation also benefited the company.
For the first quarter of Walmart's fiscal year 2025, the company expects consolidated net sales to grow in the range of 4% to 5%. Adjusted earnings per share are expected to come in between $1.48 and $1.56 on a pre-stock-split basis and $0.49 to $0.52 post-split.
Walmart previously announced a three-for-one stock split will take effect this Friday.
Walmart making further investments in digital, ads
Walmart is officially stepping up to compete with Amazon's (AMZN) surging advertising business.
The company announced plans to acquire the maker of connected TV platform Vizio for $2.3 billion, or $11.50 per share. The move should accelerate its retail media business, Walmart Connect, which grew 22% year over year in the US.
Shares of Vizio surged 16% in today's session, making it one of Yahoo Finance's top trending tickers.
That's slightly higher than the $2 billion the Wall Street Journal reported last week.
This will allow Walmart to "leverage TV viewership data" to market its products across its ecosystems. It could also offer direct e-commerce sales on the connected TV platform — a "massive opportunity" as consumers continue cord cutting — and would allow the retailer to gain additional data on its viewers and customers, Wedbush analyst Alicia Reese wrote in a client note prior to the announcement.
"[Advertising] is a fast-growing high-margin part of our business," Walmart CFO John David Rainey told Yahoo Finance Live. "And what this deal with Vizio does — it’s very complementary to what we’re doing organically."
Telsey Advisory Group senior managing director Joe Feldman said the consumer data "is quite valuable" as Walmart looks to grow its ecosystem, especially its Walmart+ membership platform.
Walmart is "trying to build something like an Amazon Prime; this could be a way towards doing that," Feldman added. However, he's skeptical about the price that Walmart is willing to pay, and what this could mean for other retailers that sell Vizio TVs, like Costco (COST), Target (TGT), and Best Buy (BBY).
But Walmart has a track record of taking some risks with acquisitions, which include Jet.com (eventually discontinued), Flipkart (not yet profitable), and Moosejaw and Bonobos (later resold).
This could be another example of Walmart's "interest in learning and growing its digital capabilities while clearly [being] willing to take some flyers," JPMorgan analyst Chris Horvers wrote in a note to clients.
Horvers does not believe the deal would raise antitrust concerns, given "consumer electronics is one of the most competitive markets in the world" and Walmart's private-label TV brand "does not have anywhere near the share of Samsung, TCL, LG, etc."
"We think this deal makes eminent sense, and it ultimately allows us to better serve our customers," Walmart's Rainey added.
Earnings breakdown
Here's what Walmart reported in its Q4 results, compared with Bloomberg consensus data:
Revenue: $173.4 billion versus $170.66 billion expected
Adjusted earnings per share: $1.80 versus $1.65 expected
Same-store US sales growth: 3.4% versus 3.2% expected
Walmart US same-store sales: 4.0% versus 3.12% expected
Transaction growth: 4.3% versus 2.30% expected
Ticket growth: -0.3% versus 1.16% expected
Sam's Club US same-store sales growth: 3.1% versus 2.99% expected
Walmart US e-commerce growth: 17.0% versus 15.49% expected
Here's what Walmart reported for the full 2024 fiscal year, per Bloomberg consensus data:
Revenue: $648.1 billion versus $644.83 billion expected
Adjusted earnings per share: $6.65 versus $6.49 expected
Same-store US sales growth: 6.0% versus 5.35% expected
Walmart US same-store sales: 5.6% versus 5.16% expected
Sam's Club US same-store sales growth: 4.8% versus 4.75% expected
Correction: A previous version of this article misspelled the name of Walmart CEO Doug McMillon. We regret the error.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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