Walmart Posts Strong Q2 Revenue Growth Despite Profit Dip Upgrades Full-Year Outlook
Thursday, Aug 15, 2024 9:00 am ET
Walmart Inc. (WMT.US) announced its fiscal 2025 second-quarter results ahead of the U.S. market opening on August 15th. The retail giant reported Q2 revenue of $169.3 billion, a 4.7% increase compared to the same period last year, exceeding market expectations. However, net profit fell 43% to $4.5 billion. Adjusted earnings per share were $0.67, above analysts' average forecast of $0.65.
Walmart has revised its full-year sales forecast upwards, anticipating that the company will attract more budget-conscious shoppers. The chain now expects net sales to grow by 4.75% this year, up from a previous estimate of 4%. Additionally, Walmart has raised its earnings and profit targets.
Shares of Walmart surged by as much as 7% in pre-market trading in New York. At the time of reporting, the stock was up by 6.02%, trading at $72.79 per share.
Chief Financial Officer John David Rainey stated, "We find consumers still to be savvy and value-seeking, focusing on essentials." He noted that there are no signs of deteriorating financial conditions among customers.
Performance remained steady every month this quarter, with no downturn observed in the latest quarter ending in July. Rainey highlighted that the revised guidance reflects strong performance in the first half, although uncertainties remain due to the upcoming U.S. elections and geopolitical instability in the Middle East.
U.S. comparable sales, excluding fuel, rose by 4.2%, driven mainly by increases in both volumes and transactions. This exceeded analysts' expectation of a 3.4% increase, covering both online sales and revenues from physical stores operating for at least one year.
International sales grew by 8.3%, largely due to impressive performances in Walmart Mexico and China. Notably, comparable store sales in China soared by 13.8%, powered by robust growth at Sam's Club and through e-commerce.
In recent weeks, investors have scrutinized companies to decipher the reasons behind a sluggish job market and stock market volatility. Walmart's optimistic outlook suggests that in the face of economic uncertainties and high-interest rates, U.S. consumers are becoming more discerning. American consumers are also cutting back on travel and postponing major home renovation projects. Retailers like Home Depot and Wayfair have signaled a weakening consumer environment.
Walmart’s general merchandise sales, which include products like electronics and clothing, rebounded after declining for 11 consecutive quarters. With a focus on essentials, general merchandise with higher profit margins had been a drag on the company's finances in recent years.
This quarter saw strong performances in lawn and garden items and seasonal products like pool floats. The back-to-school season also kicked off well, with strong demand for stationery supplies.
Walmart’s frugality trends over the past few quarters have propelled its business forward, making it an outlier among consumer goods companies encountering weak demand. This quarter, Walmart introduced more discounts, and the sales of food items rose by 35%.
With grocery sales accounting for about 60% of Walmart U.S.'s revenue, this segment continues to thrive, with the retailer seeing growing traffic, market share, and shoppers across all income levels. Higher-income shoppers notably contribute to this growth.
In the U.S., Walmart's e-commerce business grew by 22%, leveraging its vast network of approximately 4,600 stores to manage online orders. The company is also investing in advertising, third-party marketplaces, and other higher-margin new businesses. Walmart’s U.S. e-commerce operation is nearing profitability, a crucial factor in its competition with Amazon.com.
Walmart has revised its full-year sales forecast upwards, anticipating that the company will attract more budget-conscious shoppers. The chain now expects net sales to grow by 4.75% this year, up from a previous estimate of 4%. Additionally, Walmart has raised its earnings and profit targets.
Shares of Walmart surged by as much as 7% in pre-market trading in New York. At the time of reporting, the stock was up by 6.02%, trading at $72.79 per share.
Chief Financial Officer John David Rainey stated, "We find consumers still to be savvy and value-seeking, focusing on essentials." He noted that there are no signs of deteriorating financial conditions among customers.
Performance remained steady every month this quarter, with no downturn observed in the latest quarter ending in July. Rainey highlighted that the revised guidance reflects strong performance in the first half, although uncertainties remain due to the upcoming U.S. elections and geopolitical instability in the Middle East.
U.S. comparable sales, excluding fuel, rose by 4.2%, driven mainly by increases in both volumes and transactions. This exceeded analysts' expectation of a 3.4% increase, covering both online sales and revenues from physical stores operating for at least one year.
International sales grew by 8.3%, largely due to impressive performances in Walmart Mexico and China. Notably, comparable store sales in China soared by 13.8%, powered by robust growth at Sam's Club and through e-commerce.
In recent weeks, investors have scrutinized companies to decipher the reasons behind a sluggish job market and stock market volatility. Walmart's optimistic outlook suggests that in the face of economic uncertainties and high-interest rates, U.S. consumers are becoming more discerning. American consumers are also cutting back on travel and postponing major home renovation projects. Retailers like Home Depot and Wayfair have signaled a weakening consumer environment.
Walmart’s general merchandise sales, which include products like electronics and clothing, rebounded after declining for 11 consecutive quarters. With a focus on essentials, general merchandise with higher profit margins had been a drag on the company's finances in recent years.
This quarter saw strong performances in lawn and garden items and seasonal products like pool floats. The back-to-school season also kicked off well, with strong demand for stationery supplies.
Walmart’s frugality trends over the past few quarters have propelled its business forward, making it an outlier among consumer goods companies encountering weak demand. This quarter, Walmart introduced more discounts, and the sales of food items rose by 35%.
With grocery sales accounting for about 60% of Walmart U.S.'s revenue, this segment continues to thrive, with the retailer seeing growing traffic, market share, and shoppers across all income levels. Higher-income shoppers notably contribute to this growth.
In the U.S., Walmart's e-commerce business grew by 22%, leveraging its vast network of approximately 4,600 stores to manage online orders. The company is also investing in advertising, third-party marketplaces, and other higher-margin new businesses. Walmart’s U.S. e-commerce operation is nearing profitability, a crucial factor in its competition with Amazon.com.