Q2 revenue and profit both exceeded expectations! Walmart raises full-year performance guidance!

Walmart's second-quarter sales and profits exceeded expectations, thanks to strong consumer demand for low-priced groceries and health products, according to foreign media reports. The retail giant raised its full-year performance guidance in a earnings call on Thursday (August 17). Walmart's stock price has climbed 12.3% this year.

"We had another strong quarter," Wal-Mart CEO Doug McMillon said in a statement. "Our strength is in food, but we are also encouraged by our performance in non-food compared to our expectations when we began the quarter. Our inventory is in good shape, and we are optimistic about our performance in the second half of the year."

Notably, Walmart announced several senior leadership changes the day before releasing its earnings report, including that Judith McKenna, president and CEO of Walmart International, will retire and Kath McLay, CEO of Sam's Club, will take over her position.

The company's strong results this quarter contrasted with rival Target, which reported a 5.4% drop in second-quarter sales. Walmart said it saw strength across its segments as shoppers continue to cope with economic pressures.

“We are seeing people across all income brackets shop at Walmart more frequently, looking for savings on their daily lives,” McMillon said on the earnings call. “This gives us an opportunity to drive sales in more discretionary categories.”

The financial report shows that Walmart's net profit jumped 53% to $7.891 billion in the past quarter ending July 31, compared with $5.149 billion in the same period last year. Adjusted earnings per share were $1.84, exceeding analysts' expectations of $1.71.

Walmart's consolidated revenue rose nearly 5.7% to $161.6 billion, up from $152.8 billion a year earlier and ahead of analysts' estimates of $160.2 billion. International sales rose 13% to $17.6 billion.

Driven by pickup and delivery services, e-commerce sales in the United States grew 24%. Advertising is also an important source of Walmart's revenue, growing about 35% in the quarter. McMillon said that higher-margin businesses, including advertising, are the main reason why Walmart's profits will grow faster than sales in the next five years.

Walmart's U.S. same-store sales rose 6.4%, beating expectations, thanks to strong sales of groceries and health products. The company noted that it gained market share in the grocery category on the back of strong unit volume growth.

Walmart’s U.S. transaction volume grew 2.9% in the second quarter, while average order value increased 3.4%, as customers visited Walmart stores and its website more frequently and bought more items.

In addition, Walmart's U.S. Sam's Club sales fell 0.3% to $21.8 billion in the second quarter compared with the same period last year. Same-store sales at Sam's Club, excluding fuel, grew 5.5%, in line with analysts' expectations.

For fiscal 2024, Walmart expects adjusted earnings per share of $6.36 to $6.46 and sales growth of 4% to 4.5%. This is higher than the company's previous forecast of 3.5% net sales growth and adjusted earnings per share between $6.10 and $6.20.

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