Walmart Surges Past Sales Estimates, Boosts Outlook

August 16, 2024 03:30 AM AEST | By Invezz

Walmart’s Strong Sales and Earnings

Walmart Inc. (NYSE:WMT) showcased resilience in its latest earnings report, exceeding expectations for both sales and earnings despite ongoing inflation and discerning consumer behavior. For the second quarter, Walmart’s revenue grew by 4.8% to $169.34 billion, surpassing the anticipated $168.46 billion. Adjusted earnings per share (EPS) reached $0.67, reflecting a 9.8% increase year-over-year and exceeding estimates.

CEO Doug McMillon highlighted the broad-based growth across Walmart’s operations, stating that both store and club sales are up. The company’s e-commerce segment continues to expand, driven by enhancements in pickup and delivery services. Additionally, Walmart’s online marketplace, membership model, and advertising business—which grew 26% globally—contributed to diversifying its profit streams.

Strong Performance Across U.S. and International Markets

U.S. same-store sales increased by 4.3%, with a 4.2% rise in Walmart stores and a 5.2% increase at Sam’s Club, according to Bloomberg estimates. Groceries remain a significant driver of foot traffic and ticket size, accounting for approximately 60% of Walmart’s U.S. sales. Walmart recently introduced a private label brand, Bettergoods, offering healthier, higher-quality products at a $5 price point, aimed at catering to value-seeking consumers.

Walmart’s focus on delivering value and convenience has allowed it to gain market share across all income levels, including higher-income households. CFRA analyst Arun Sundaram noted that Walmart’s efforts to modernize its image are aimed at retaining these higher-income shoppers.

The company’s international business also performed well, with sales increasing by 7.1% as Walmart continues to expand its store count and online presence.

Earnings and Outlook

Here is the earnings breakdown for Walmart’s fiscal year 2025 second quarter, compared to Bloomberg estimates:

Revenue: $169.34 billion vs. $168.46 billion
Adjusted EPS: $0.67 vs. $0.65
Overall same-store U.S. sales growth: 4.30% vs. 3.41%
Walmart U.S. same-store sales growth: 4.20% vs. 3.43%
Traffic growth: 3.60% vs. 2.82%
Ticket growth: 0.60% vs. 1.27%
E-commerce growth: 3.00% vs. 2.10%
Sam’s Club U.S. same-store sales growth: 5.20% vs. 3.90%

For fiscal 2025, Walmart has raised its sales growth forecast to between 3.75% and 4.75%, with adjusted EPS expected to range from $2.35 to $2.43. This revision compares favorably to previous guidance, which projected sales growth at the higher end of 3% to 4% and adjusted EPS between $2.23 and $2.37.

Walmart’s shares have risen 27.5% this year, outperforming the S&P 500 (^GSPC), which has gained 14%.

Featured Image: Megapixl

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