It’s bent, but not yet broken…
That’s the vibe of the inflation-stricken crowds roaming the shelves at Walmart (WMT) in search of the latest price cuts, Chief Financial Officer John David Rainey told Yahoo Finance (video above).
“The consumer is holding up,” Rainey said Thursday, shortly after the nation’s largest retailer reported better-than-expected profits.
Walmart’s second quarter showed the retailer is taking advantage of thrifty consumers worried about persistent inflation, a competitive election season and what appears to be a slowing job market.
The company beat Wall Street expectations for revenue and profit as same-store sales rose 4.2 percent at its U.S. business, its largest division.
Walmart US saw sales growth in high-frequency product categories like food and health and wellness, while cautious shoppers visited discretionary departments like furniture and clothing less frequently.
People buy groceries at a Walmart Superstore in Secaucus, New Jersey, on July 11, 2024. (AP Photo/Eduardo Munoz Alvarez) (AP)
Walmart’s U.S. e-commerce sales rose 22%, also beating expectations.
With the tailwinds, Walmart raised its full-year sales and profit outlook.
Walmart shares rose 6.5% in early morning trading.
Rainey added that the back-to-school shopping season is off to a “strong” start.
“We see room for further upside as traffic remains strong and e-commerce losses improve, and we expect automation technology and AI to continue to play a key role. Walmart’s strength continues, and we believe this increased consistency, along with expanding higher-margin revenue streams, justifies a higher multiple,” Jefferies analyst Corey Tarlow said in a client note.
Second Quarter: Revenue Overview
Net sales: $169.3 billion, up 4.8% year over year; expected to be $168.46 billion
Adjusted earnings per share: $0.67, up 9.8% year over year; expectation was $0.65
Walmart US same-store sales growth: +4.2% (expected: +3.4%)
Sam’s Club US same-store sales growth: +5.2% (expected: +3.9%)
Walmart US e-commerce sales growth: +22% (expected: +16.9%)
Also of note: Forward guidance
Three times each week, I have insightful conversations with some of the biggest names in business and markets on the Opening Bid podcast. Find more episodes on our video hub, available on your favorite streaming service, or listen and subscribe on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
In the Opening Bid episode below, retail expert and investor Jeff Macke shares his thoughts on the plight of Walmart’s longtime rival, Target.
The story continues
Brian Sozzi is editor-in-chief of Yahoo Finance. Follow Sozzi on Twitter. Brian Sozzi You can also find me on LinkedIn. Looking for tips on deals, mergers, the activist landscape, and more? Email me at brian.sozzi@yahoofinance.com.
Find all the latest retail stock news and events here to better tailor your investment strategy.