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Wall Street Analysts Have Always Been Bogged Down by Earnings Season
Andrew Meister
February 25, 2024
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Reflecting on my 29-year career (and still going), the earnings period has always been a great time of anxiety, celebration, and disappointment.
When I worked on Wall Street, there was a great focus on being the first to publish. There was no internet, so we received the earnings press release via facsimile machine.
The conference calls were not “streamed” as they are today. You dialed into a 1-800 number to listen in. If two calls were going at the same time, an empty conference room was reserved and you’d dial into the call, setup a tape recorder to hit PLAY + REC buttons. You recorded the call and listened to the call later and, of course, took notes.
Once the internet was available, earnings calls were streamed. I was a big fan of CCBN and met with the founder, Rob Adler. CCBN was one of the first companies to livestream earnings calls. Rob flew to Milwaukee to meet with me. he asked, what can we do to make the product better? I said, transcribe the calls. I remember him writing down notes of our conversation on a legal pad.
Soon CCBN launched transcripts. You could download and print them, a wonderful feature that still exists today on many platforms. CCBN was bought by Reuters and FactSet bought CCBN’s rival in the space StreetEvents.
Back to ancient my workflow.
Post earnings release and conference call, I’d update the model, write the note, and then call the client’s voicemail at 1 am Mountain time. Just to be first. I’d call clients from my home phone in my apartment. As I said earlier, there was a lot of importance placed on being first.
Times have now changed, with the advent of LLM’s. We can now use Retrieval Augmented Generation (RAG) to help analysts and portfolio managers get insights from calls faster. In my view, if AI is done properly, our workflow will be more efficient from here.
I know because my team built an app that can generate insights. Everything below is AI-generated. Let me know what you think and give me a follow on LinkedIn. (1) Andrew Meister | LinkedIn
Best,
Drew
Summary Walmart's Q4 FY2024 earnings call highlighted strong sales growth, adjusted operating profit growth, and significant achievements in eCommerce and market share gains.
Metric | Value | Discussion |
|---|---|---|
Sales Growth | 4.9% | Demonstrated robust sales growth across various markets. |
Adjusted Operating Profit Growth (Constant Currency) | 10.9% | Outpaced sales growth, indicating improved profitability. |
Global eCommerce Sales | $100 billion | Surpassed $100 billion for the first time, marking a significant milestone. |
U.S. Transaction Counts and Unit Volumes | Increased | Signaled strong customer demand and market share gains. |
Inventory Levels | Down vs. Last Year | Improved stock management, contributing to healthier margins. |
Walmart U.S. Customer Experience Scores | 3-Year High | High scores even during peak holiday season, reflecting operational excellence. |
Food Pricing Rollbacks in Walmart U.S. | Significantly Up in Q4 vs. Last Year | Enhanced value proposition for customers, driving traffic and sales. |
General Merchandise Prices | Lower than a Year Ago | Attracted price-sensitive customers, boosting unit sales. |
Private Brand Penetration | Up | Increased in many operating countries, including the U.S., enhancing margins. |
Retail Prices on Like-for-Like Items (Walmart U.S.) | Inflated by ~80 Basis Points | Indicated slight inflation in retail prices, impacting consumer behavior. |
Sam's Club U.S. Pricing Position | Similar to Walmart U.S. | Consistent pricing strategy across segments. |
Global Advertising Growth | 28% | Reached $3.4 billion, contributing to profit growth. |
Store and Club Remodels | 928 Globally Next Year | Investment in customer experience and productivity. |
New Sam's Clubs in the U.S. | 30 Over the Next Several Years | Expansion strategy to strengthen market presence. |
New Supercenters and Neighborhood Markets in the U.S. | More than 150 Over the Next 5 Years | Part of growth and expansion strategy. |
International Store and Club Openings | ~230 Next Year | Focused on Mexico, Central America, and China. |
Sam's Clubs in China | Ended the Year with 47 | Strong performance contributing to top and bottom line. |
Project Gigaton Achievement | 1 Billion Metric Tons of Emissions Reduced | Achieved 6 years early, highlighting sustainability efforts. |
Associate Stock Purchase Plan Participation | Over 400,000 Associates | Demonstrates commitment to associate engagement and ownership. |
FY'25 Sales Growth (Constant Currency) | 3% to 4% | Projected growth indicating continued momentum. |
FY'25 Operating Income Growth | 4% to 6% | Expected to outpace sales growth, reflecting improved efficiency and profitability. |
Strategic Insights
eCommerce as a Growth Engine: Walmart's surpassing of $100 billion in global eCommerce sales underscores the critical role of digital channels in driving future revenue growth. The emphasis on enhancing eCommerce capabilities, including Marketplace and fulfillment services, suggests a strategic pivot towards a more integrated omnichannel retail model. This shift is likely to redefine competitive dynamics in the retail sector, with Walmart strengthening its position against both traditional and online retailers.
Investment in Automation and Technology: The planned remodels and investments in supply chain automation highlight Walmart's commitment to improving operational efficiency and customer experience. This focus on technology, including the use of generative AI for search optimization and the rollout of new exit technology at Sam's Club, positions Walmart to leverage emerging technologies for competitive advantage. The potential for cost savings and improved margins through automation could significantly impact Walmart's profitability and ROI in the medium to long term.
Sustainability as a Competitive Edge: The early achievement of Project Gigaton's goal signals Walmart's leadership in corporate sustainability. This focus not only enhances Walmart's brand reputation but also positions it to benefit from growing consumer and investor interest in environmentally responsible companies. The emphasis on sustainability could become a key differentiator in attracting a loyal customer base and driving long-term growth.
Market Share Gains Across Demographics: Walmart's reported market share gains, particularly among higher-income households, suggest a broadening appeal of its value proposition. This trend challenges the conventional view of Walmart as primarily serving price-sensitive segments and indicates potential for growth across diverse consumer groups. The ability to attract and retain higher-income customers through convenience and digital offerings could reshape Walmart's customer base and drive revenue growth.
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