Walmart experienced its slowest growth in U.S. comparable sales in six years during the most recent quarter. The retailer’s cautious outlook for the year led to a 6% drop in company shares before the market opened on Thursday.
In the second quarter, U.S. comparable sales, which account for sales at stores open for at least a year and online sales linked to those locations, increased by 2.6%. This marks a decrease from the 4.1% growth seen in the previous quarter. Excluding the wellness category, encompassing Walmart’s pharmacies, sales rose by 3.4%. The company noted that sales were impacted by federal legislation capping prices on certain high-cost Medicare drugs. Analysts at FactSet had projected a 3.8% increase.
Walmart’s U.S. e-commerce business, a vital growth driver, expanded by 24%, slightly down from the first-quarter growth rate of 26%. As one of the first major retailers reporting second-quarter results, Walmart’s performance offers industry insights into consumer behavior amidst ongoing price pressures. These pressures are tied to conflicts in Iran.
With over 150 million weekly customers across its websites and stores, Walmart serves as a consumer spending gauge. This is especially significant as U.S. retail sales data recently showed unexpected weakness in July. Concurrently, the University of Michigan reported a growing economic pessimism among consumers, many facing high costs for essentials like gas and groceries.
Walmart’s latest figures reveal the smallest gain in comparable store sales since a 1.9% increase for the quarter ending January 31, 2020, according to FactSet. The retailer expanded its customer base, capturing a larger share of wealthier households, notably those with annual incomes exceeding $100,000.
In the three months ending July 31, Walmart’s net income reached $6.37 billion, equating to 80 cents per share. Adjusted per-share results were 81 cents, surpassing Wall Street expectations of 74 cents from FactSet. Sales grew by 5.9% to $187.94 billion, exceeding analyst predictions of $186.62 billion.
Looking ahead, Walmart forecasts third-quarter earnings per share between 62 and 64 cents and sales growth of 3% to 3.5%, projecting sales from $184.88 billion to $186.23 billion. These forecasts fall short of analyst expectations of 68 cents per share and sales of $188.19 billion, according to FactSet.
For the full year, Walmart anticipates earnings per share ranging from $2.80 to $2.87, with sales expected to rise 4% to 5%, projecting between $741.7 billion and $748.8 billion. FactSet analysts had anticipated $2.90 per share and $752.06 billion in sales for the year.
Leave a Reply