Walmart Reports Slow Growth and Cautious Annual Outlook
Walmart faced its slowest growth in U.S. comparable sales in six years during its latest quarter, leading to a 6% drop in company shares before Thursday’s market opening. Sales in U.S. locations open for at least a year, including online sales tied to those stores, rose 2.6% in the second quarter, compared to a 4.1% rise in the previous quarter.
Excluding the wellness category, which includes Walmart’s pharmacies, comparable sales grew 3.4% in the same period. These sales were impacted by federal legislation that required some high-cost Medicare drugs to be dispensed at capped prices. Analysts had projected a 3.8% increase, according to FactSet.
Walmart’s U.S. e-commerce segment, a key growth driver, rose by 24%, slower than the 26% growth seen in the first quarter. As one of the first major retailers to report second-quarter results, Walmart’s performance offers insights into consumer behavior amid ongoing price pressures from the conflict in Iran.
With over 150 million visitors to its website and stores each week, Walmart is a key indicator of consumer spending. The attention on this quarter grew following data indicating weak retail sales in July, along with a University of Michigan survey showing economic pessimism among consumers faced with rising costs for essentials.
The quarter marked the smallest increase in comparable store sales since a 1.9% rise for the quarter ending January 31, 2020, according to FactSet. Walmart’s customer base has expanded, capturing a larger share of high-income households, with significant gains from those earning over $100,000 annually.
Walmart’s quarterly net income totaled $6.37 billion, or 80 cents per share, for the period ending July 31. Adjusted per-share earnings were 81 cents, surpassing the 74 cents expected by analysts, according to FactSet. Sales rose 5.9% to $187.94 billion, exceeding the $186.62 billion forecasted by analysts.
Looking ahead to the third quarter, Walmart anticipates earnings per share of 62 to 64 cents, with sales increasing by 3% to 3.5%. This implies sales between $184.88 billion and $186.23 billion. These projections fall short of analysts’ expectations of 68 cents per share and $188.19 billion in sales, as per FactSet.
For the full year, Walmart projects earnings per share in the range of $2.80 to $2.87, with sales growth between 4% and 5%. This suggests sales between $741.7 billion and $748.8 billion, according to FactSet. Analysts had anticipated $2.90 per share and $752.06 billion in sales for the year.