Walmart Posts Strong Q2 Sales, Raises Full-Year Outlook

Walmart has posted quarterly sales that beat Wall Street estimates and raised its outlook for the year, as it saw another strong quarter of e-commerce growth and benefited from tariff refunds.

CFO John David Rainey told CNBC, ‘Our business is strong. We feel really good about the progress we’re making.’

Key Highlights:

• Revenue rose 5.9% in its fiscal second quarter, with e-commerce sales jumping 23% globally.
• U.S. comparable sales grew 2.6%, offset in part by a 0.8% headwind in its health and wellness business due to price caps on certain drugs.
• For the third quarter, Walmart expects net sales to increase between 3% and 3.75%, and adjusted earnings per share to be between 62 cents and 64 cents.

Walmart also expects net sales to increase 4% to 5% for the year, compared to a previous outlook of between 3.5% and 4.5% growth. Adjusted earnings are expected to be between $2.80 and $2.87 per share, compared to the prior guidance of between $2.75 and $2.85 per share.

Rainey stated that the company was eligible to receive roughly $2.9 billion in tariff refunds, and it has not yet gotten back less than $100 million of that total. He added that Walmart plans to use those funds to lower prices for consumers, and that impact will be seen in the third quarter.

The company is using the tariff refund to lower prices across categories, including beef. Rainey emphasized that consumers are still spending, and real wage growth is keeping pace, despite the strain from high fuel and food costs.

Walmart’s efforts to lower prices come as many shoppers have cut back on spending due to the economic pressures. However, the company is well-positioned to weather these pullbacks due to its value reputation and scale as the largest U.S. retailer.

The retailer’s quarterly results show a strong performance, with earnings per share of 81 cents adjusted, and revenue of $187.94 billion, beating expectations of $186.77 billion. Net income for the quarter was $6.37 billion, or 80 cents per share, compared to $7.03 billion, or 88 cents per share, in the year-ago period.

Walmart’s e-commerce sales jumped 23% globally, while its global advertising revenue climbed 38%. The company’s U.S. sales grew 2.6%, with net sales of $125.2 billion compared to $120.9 billion the year prior.

Sam’s Club U.S. saw net sales of $25.7 billion for the quarter, up 8.8% from the previous year, as membership fees climbed 6%. Walmart+ membership fee revenue jumped 17%, with net adds hitting a high for a second quarter.

The company’s global inventory was up 6.7% for the quarter, with a significant portion related to more expensive and elevated brands. Rainey noted that the biggest component of its market share gains came from the high-income consumer.

Walmart’s grocery segment saw mid-single-digit percentage point growth, while health and wellness saw a low single-digit decline for the quarter. General merchandise revenue was up slightly due to strength in toys and fashion, furniture, and private label.