Walmart Set to Achieve Long-Term Gross Margin Growth in Q2, Says BofA

Walmart is poised to record sustained gross margin expansion in Q2, according to BofA. The retail giant has seen a significant increase in its gross margin, driven by strong sales growth and cost-cutting measures. Walmart's net sales have grown in the US and internationally, with a distribution network of over 5,000 points of sales across various countries.

Walmart Inc. (WMT) is set to report its second-quarter earnings on August 21, with analysts projecting a significant increase in gross margins, driven by robust sales growth and cost-cutting measures. According to Bank of America (BofA), Walmart's gross margin is expected to expand in Q2, reflecting the company's strategic efforts to optimize its operations and enhance profitability.

Analysts anticipate Walmart's earnings per share (EPS) to be between $0.72 and $0.73, representing a 7.46% year-over-year increase [2]. This is expected to be supported by a projected net income of $5.755 billion, a 22.5% increase from the same period last year [2]. Revenue is forecast to be between $174 billion and $175.6 billion, a 5.6% increase from the prior year [2].

Walmart's U.S. segment is expected to report sales of $118 billion, a 2.9% increase from the year-ago period, with operating income pegged at $7.011 billion and an operating margin of 5.9% [2]. The U.S. e-commerce sales are projected to total more than $21 billion, up 17.9% year over year [2]. Sam's Club is expected to report sales of $23.77 billion, a 3.5% increase, with operating income of $622 million and a 2.62% operating margin [2].

Internationally, Walmart's sales are projected to total $31.123 billion, a 5.3% increase year over year, with operating income of $1.463 billion and a 4.7% operating margin [2]. The segment is expected to show strength in China and India, with Mexico posting sluggish growth in the past quarter [2].

The retail giant's distribution network, which includes over 5,000 points of sales across various countries, has been a key factor in its success. Walmart's gross margin expansion is also attributed to its strong sales growth and cost-cutting measures, which have been instrumental in boosting its profitability.

Analysts are largely bullish on Walmart, with several firms maintaining or raising their target prices and ratings. D.A. Davidson, for instance, maintains a "buy" rating with an average target price of $108.87 [2], while Oppenheimer increased its target price to $115 and gave the company an "outperform" rating [2]. Shares of Walmart have increased more than 10.65% since January 1, 2025, and have traded between $72.52 and $105.30 over the past 52 weeks [2].

In conclusion, Walmart's projected gross margin expansion in Q2 is a testament to its strategic efforts to optimize operations and enhance profitability. The company's strong sales growth and cost-cutting measures have positioned it well to report robust earnings in the second quarter of 2025.

References:
[1] https://www.nasdaq.com/articles/walmart-wmt-q2-earnings-horizon-analysts-insights-key-performance-measures
[2] https://talkbusiness.net/2025/08/walmarts-second-quarter-net-income-could-grow-7-4/