Walmart on Thursday raised its full-year guidance following a nearly 5% increase in quarterly revenue, fueled by increased activity at its brick-and-mortar stores and online platform, along with better-than-expected sales in non-food categories.
The retail giant beat Wall Street forecasts in both revenue and profit, sending its stock price up 6% during morning trading.
Walmart now expects full-year sales to rise 3.75% to 4.75%, with adjusted earnings per share between $2.35 and $2.43. The outlook change marks a change from previous projections, which called for sales growth of 3% to 4% and earnings per share between $2.23 and $2.37.
Despite the upbeat revision, Walmart’s second-half outlook remains cautious, likely falling short of Wall Street’s more robust expectations. The retailer expects third-quarter adjusted earnings of 51 cents to 52 cents a share, slightly below analysts’ forecasts of 54 cents. For the full year, analysts had expected earnings at the high end of Walmart’s range, about $2.43 a share.
In an interview with CNBC, Walmart CFO John David Rainey attributed the positive outlook to solid performance in the first half of the year. He expressed a cautious stance for the second half, citing the potential impact of the 2024 election, unrest in the Middle East and other global factors on consumer sentiment.
Rainey noted that there were no noticeable changes in consumer behavior, with sales performance consistent throughout the quarter and a solid start to the back-to-school season.
“Our customers continue to prioritize the essentials, demonstrating selectivity and a propensity for value, which has remained stable with no further deterioration,” Rainey noted.
One notable positive trend for Walmart was the increase in sales of consumer staples, such as lawn and garden products, which marked the first increase in 11 quarters, albeit a modest one.
Walmart’s fiscal second-quarter financials beat analysts’ expectations, according to an LSEG survey:
- Adjusted earnings per share: 67 cents, versus 65 cents expected
- Revenue: $169.34 billion, versus $168.63 billion expected
Walmart reported net income of $4.5 billion, or 56 cents a share, for the quarter ended July 31, down from $7.89 billion, or 97 cents a share, for the year.
Revenue increased from $161.63 billion in the year-ago quarter. Walmart US reported a 4.2% increase in comparable sales excluding fuel, beating analysts’ forecasts. Sam’s Club reported a 5.2% increase in comparable metrics, in line with expectations.
Global e-commerce sales increased 21%, with the U.S. up 22%. U.S. customers frequented Walmart stores and the website more than the previous year, with transaction counts up 3.6% and average spend per visit up 0.6%.
Walmart’s performance offers a broader view of American household spending trends and economic expectations, especially significant as inflation concerns have recently prompted affluent consumers to seek value at its stores.
Inflation rates have moderated to historical averages, according to the latest data from the U.S. Department of Labor. Amid political debate over how to handle rising living costs, Walmart has continued to push for lower retail prices.
Rainey highlighted the company’s strategy of offering temporary price reductions, with significant increases in those promotions, particularly for groceries. Despite ongoing high prices compared to pre-pandemic levels, Walmart remains committed to providing affordable options, especially as the gap between the costs of eating out and cooking at home widens.
As of Wednesday’s close, Walmart shares were trading at $68.66, marking a significant year-to-date gain of nearly 31%, significantly outpacing the gains of the S&P 500 index.
