Walmart – The Best Offense starts in Defense

Walmart – The Best Offense starts in Defense

Last week, Walmart released their Q1 2025 results. The group’s revenue reached $161.5 billion for the quarter, growing 6% year-on-year. Operating income rose by 9.6% to $6.8 billion. Walmart’s gross margin increased from 23.7% a year ago to 24.1% this quarter. This improvement was due to fewer inventory markdowns compared to last year. Additionally, Walmart’s advertising business, which typically has a higher gross margin than general retail, has been growing faster than other parts of the business, contributing to the overall margin increase. With this in mind, Walmart’s management team stressed that they are trying to keep their product gross margin as low as possible so as to incentivise more customers to shop with them. Walmart indicated that they have seen a meaningful increase in higher-income earners shopping at their stores. Walmart’s e-commerce business grew by 22% on a quarter-to-quarter basis, showing good returns on their technology spend.

Walmart and other large retailers generally perform well in inflationary environments. They can buy in bulk, which helps lower their prices. Additionally, when they place orders in advance, they secure prices at that time. Once the goods are delivered and ready to be sold, the new, higher inflationary prices are evident in the economy. This allows them to sell at those higher prices or slightly less, giving the impression of saving customers money compared to smaller and/or less efficient businesses that order closer to the time of sale.

Walmart faces intense competition worldwide. They not only compete against local retailers but also against giants like Amazon, which has a highly profitable cloud business. From its inception, Walmart has focused on serving underrepresented locations, offering customers an all-in-one store with “everyday low prices.”

Walmart is held in the Lunar BCI Worldwide Flexible Fund and by Lunar Capital’s Offshore Portfolio Clients.

Key Indicators
Index / Fund / Rate
Start of Year
Last Week
This Week
% Change YTD
Index / Fund / Rate
Start of Year
188.33
Last Week
201.89
This Week
204.58
% Change YTD
8.63% Lunar Capital increasesymbol
Index / Fund / Rate
JSE ALSI
Start of Year
76 893
Last Week
78 464
This Week
79 531 Lunar Capital increasesymbol
% Change YTD
3.43% Lunar Capital increasesymbol
Index / Fund / Rate
NASDAQ Composite
Start of Year
15 011
Last Week
16 341
This Week
16 686 Lunar Capital increasesymbol
% Change YTD
11.16% Lunar Capital increasesymbol
Index / Fund / Rate
S&P 500
Start of Year
4 770
Last Week
5 223
This Week
5 303 Lunar Capital increasesymbol
% Change YTD
11.18% Lunar Capital increasesymbol
Index / Fund / Rate
Prime Lending Rate
Start of Year
11.75%
Last Week
11.75%
This Week
11.75%
% Change YTD
0.00%
Index / Fund / Rate
USD/ZAR
Start of Year
18.30
Last Week
18.46
This Week
18.17 Lunar Capital stocktake arrow down
% Change YTD
-0.71% Lunar Capital stocktake arrow down
Index / Fund / Rate
EUR/ZAR
Start of Year
20.17
Last Week
19.91
This Week
19.78 Lunar Capital stocktake arrow down
% Change YTD
-1.93% Lunar Capital stocktake arrow down
Index / Fund / Rate
Brent Crude ($'barrel)
Start of Year
76.97
Last Week
82.75
This Week
83.93 Lunar Capital increasesymbol
% Change YTD
9.04% Lunar Capital increasesymbol
Source: Iress

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Our email address is: [email protected]

Disclosures
Lunar Capital (Pty) Ltd is a registered Financial Services Provider. FSP (46567)
Read our full Disclosure statement: https://lunarcapital.co.za/disclosures/
Our Privacy Notice: https://lunarcapital.co.za/privacy-policy/
The Lunar BCI Worldwide Flexible Fund Fact Sheet  can be read here.
This stocktake is prepared for the clients of Lunar Capital (Pty) Ltd. This stocktake does not constitute financial advice and is generated for information purposes only.

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