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Walmart sticks with second-half outlook after earnings beat expectations – CNBC

A shopper wearing a protective mask shops in a Walmart store on May 18, 2021 in Hallandale Beach, Florida.

Joe Raedle | Getty Images

Walmart on Tuesday said sales grew more than 8%, but profits tightened in the fiscal se…….

A shopper wearing a protective mask shops in a Walmart store on May 18, 2021 in Hallandale Beach, Florida.

Joe Raedle | Getty Images

Walmart on Tuesday said sales grew more than 8%, but profits tightened in the fiscal second quarter, as consumers turned to the discounter for groceries and essentials.

Shares rose more than 5% in early morning trading.

The retailer’s results surpassed analysts’ expectations, but echoed its profit warning last month, when Walmart said inflation-pinched shoppers were buying less high-margin discretionary merchandise like apparel as they spent more on necessities.

Walmart expects those spending patterns to persist. It reiterated its forecast for the back half of the year, even as it sells through a glut of inventory. It expects same-store sales for Walmart U.S. to grow by about 3%, excluding fuel, for the second half of the year, or about 4% for the full year. It anticipates adjusted earnings per share will decline between 9% and 11% for the full year.

“We expect inflation to continue to influence the choices that families make and we’re adjusting to that reality so we can help them more,” McMillon told analysts on a conference call.

Here’s what Walmart reported for the fiscal second quarter ended July 31, compared with Refinitiv consensus estimates:

  • Earnings per share: $1.77 adjusted vs. $1.62 expected
  • Revenue: $152.86 billion reported vs. $150.81 billion expected

Walmart’s net income for the quarter rose to $5.15 billion, or $1.88 per share, compared with $4.28 billion, or $1.52 per share a year earlier. 

Same-store sales for Walmart U.S. grew 6.5% in the second quarter, excluding fuel, compared with the year-ago period. That was higher than the 5.9% growth that analysts expected, according to StreetAccount.

E-commerce sales rose 12% compared with the year-ago period and 18% on a two-year basis.

More high-income consumers, penny-pinching

Some of Walmart’s sales gains came from inflation, which is driving up prices of food and other items. It also got a boost as families across income levels shopped at its stores and website.

Chief Financial Officer John David Rainey told CNBC the retailer’s reputation as a discounter is attracting more middle- and high-income shoppers. About three quarters of Walmart’s market share gains in food came from customers with annual household incomes of $100,000 or more. 

He said Walmart is seeing signs of a budget-strapped consumer who is trading down “in terms of quality and quantity,” too. For example, he said, shoppers are increasingly using credit more than debit, he said. They are opting for smaller packages of food and buying items like canned tuna and beans instead of deli meats and beef. 

“Clearly, they’re stressed from higher gas prices, higher …….

Source: https://www.cnbc.com/2022/08/16/walmart-wmt-earnings-q2-2023.html

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