Walmart Shares Rise After Beating Earnings and Sales Expectations For Q2

Walmart beat expectations for earnings and revenues in Q2, after it slashed its outlook for the quarter last month.

The big-box retailer reported adjusted earnings per share of $1.77 versus an expected $1.62. Total revenue was $152.9 billion, up 8.4%, compared to estimates of $150.81 billion. Walmart U.S. comp-store sales were up 6.5%.

Despite the beat, Walmart’s results are still relatively in line with the company’s expectations from last month, when it slashed its outlook for Q2 amid a softening in consumer spending, especially in discretionary categories like apparel. Walmart also recently said it would be cutting a number of corporate jobs.

Walmart shares were up more than 4% after markets opened on Tuesday.

Walmart CEO and president Doug McMillon noted that more customers have turned to shop at Walmart during the inflationary period. Consumer prices grew 8.5% in July from a year ago, down from its 40-year high of 9.1% a month ago.

Like other retailers, Walmart has also struggled with higher-than-usual levels of inventory, with higher food prices leading to more inventory in categories like apparel. However, McMillon said the company has made progress on improving inventory levels in the U.S. as well mitigating its supply chain costs.

According to president and founder of Quo Vadis Capital, Inc. John Zolidis, Walmart’s position as the largest food retailer in the U.S. is a benefit to winning over lower and middle income consumers who are focusing their spending on non-discretionary categories like grocery.

“An environment of higher food prices, fewer stimulus dollars, and increased pressure on certain consumer cohorts should theoretically drive more traffic to Walmart stores,” Zolidis said in a note prior to Walmart’s earnings report. “The margin implications are less advantageous as this same situation would also be expected to hurt the discretionary part of the assortment.”

For fiscal year 2023, Walmart expects consolidated net sales growth of 4.5%, with Walmart U.S. comp sales growth, excluding fuel, is expected to be about 4%. Adjusted earnings per share are expected to decline between 9% and 11%.

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