Bend but don’t break… yet.
That’s the sentiment among the inflation-plagued crowds roaming the aisles to check out the latest price cuts at Walmart (WMT), CFO John David Rainey told Yahoo Finance (video above).
“The consumer is holding out,” Rainey said Thursday, moments after the largest U.S. retailer announced better-than-expected results.
Walmart’s second-quarter profits came from the plight of tight-fisted consumers worried about rampant inflation, a difficult election campaign and a looming slowdown in the labor market.
The company beat Wall Street’s revenue and earnings estimates, driven by a 4.2% comparable sales increase in its largest division, the U.S. business of the same name.
Walmart US saw sales increases in higher-frequency product categories such as grocery and health and wellness. Conversely, cautious shoppers visited less frequently in departments with lower purchase interest, such as furniture and apparel.
Walmart’s e-commerce sales in the US rose a whopping 22 percent, also beating estimates.
With this tailwind, Walmart was able to raise its sales and profit forecast for the full year.
Walmart shares rose 6.5 percent in early trading.
Rainey added that the back-to-school shopping season has started “well.”
“We continue to see upside potential as traffic remains strong and e-commerce losses improve – we expect automation technology and AI to continue to play a major role. Walmart’s strength continues and with this improved consistency as well as scaling of higher margin revenue streams, we believe a higher multiple is warranted,” Jefferies analyst Corey Tarlowe said in a note to clients.
Q2: The results overview
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Net sales: 169.3 billion US dollars, an increase of 4.8% over the previous year (estimated 168.46 billion US dollars)
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Adjusted earnings per share: USD 0.67, up 9.8% year-on-year, versus the estimate of USD 0.65
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Walmart’s comparable sales growth in the US: +4.2% versus +3.4% estimate
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Comparable sales growth at Sam’s Club in the US: +5.2% versus +3.9% estimate
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Walmart’s e-commerce sales growth in the US: +22% versus +16.9% estimate
What else caught our attention: Forward Guidance
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In the following episode of Opening Bid, retail expert and investor Jeff Macke weighs in on the problems facing Walmart’s longtime rival Target.
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Brian Sozzi is Editor-in-Chief of Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and further LinkedIn. Tips on deals, mergers, activist situations or other topics? Email [email protected].
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