As inflationary pressures weigh heavily on consumers, many retailers and food companies face a challenging economic environment. Yet, Walmart (NYSE: WMT) once again demonstrated its dominance in the retail and grocery sectors, delivering impressive Q2 results that surpassed expectations in both revenue and earnings per share (EPS).
Walmart reported $169.34 billion in revenue, exceeding the $168.46 billion estimated by analysts. EPS also came in higher than anticipated at $0.67, compared to the projected $0.65 per share.
"Each part of the business is growing," CEO Doug McMillon stated in the company’s earnings press release. He elaborated, "Store and club sales are up, eCommerce is compounding as we layer pickup and even faster growth in delivery as our speed improves."
The retail giant continued to diversify its revenue streams, with its online marketplace, membership model, and advertising business all growing by 26% globally. E-commerce growth for the quarter was particularly strong, rising 3% compared to the expected 2.1%.
Despite a rise in unemployment to 4.3% and fears of a weakening economy and potential recession, Walmart's CFO John David Rainey reassured investors during an interview with CNBC, stating that the company does not anticipate a recession. Additionally, retail sales growth for July outpaced expectations, increasing by 1% compared to the anticipated 0.4%.
Rainey acknowledged the current challenges faced by consumers, noting, "We know that they're looking for value and their dollars are stretched. They're focusing on those things that provide value for them and are being selective when purchasing larger ticket items."
Despite Walmart’s strong performance, UBS analyst Michael Lasser pointed out that the company’s market dominance is likely helping it outperform its peers, stating, "It's taking market share, so what it has been experiencing is going to be a bit different than what other retailers have been experiencing."
Looking ahead, Walmart has raised its outlook for 2024. The company now expects sales to grow between 3.75% and 4.75%, up from the previous guidance of 3% to 4%. EPS estimates have also been increased, with the company now projecting $2.35 to $2.43 per share, compared to the prior range of $2.23 to $2.37.
Walmart's stock closed up 6% on Thursday, with a year-to-date gain of over 37%.
Comments