Walmart (WMT) reported another strong quarterly result, proving its business resilient in the face of discerning consumers and rising inflation.
Second-quarter revenue rose 4.8% to $169.34 billion compared with the expected $168.46 billion. Adjusted earnings also beat expectations at $0.67 per share, up 9.8% from a year ago.
“Every part of our business is growing,” CEO Doug McMillon said in the release. “Store and club sales are increasing, e-commerce is expanding further with enhanced pickup and growing even faster with faster delivery.”
He added that the retailer’s online marketplace, membership model and advertising business, which grew 26% globally, were helping to diversify revenue.
U.S. same-store sales increased 4.3%, including a 4.2% increase at its Walmart business and a 5.2% increase at Sam’s Club.
Food remains the core business and is a major driver of increased foot traffic and sales.
“Consumers are looking for value and are maximizing their budgets. They are focusing on things that bring them value and being more selective about their big-ticket purchases,” CFO John David Rainey told Yahoo Finance.
He added that the cost differential between groceries and eating out works in Walmart’s favor: The most recent data from the Bureau of Labor Statistics shows that grocery prices rose 1.1% year over year in July. Dining out, or eating out, is up 4.1% year over year.
A Grab and Go counter at a Walmart store in Denver, North Carolina. (Lindsay Nicholson/UCG/Universal Images Group via Getty Images) (UCG via Getty Images)
For Walmart’s U.S. business, the company said it continues to gain share across all income groups, including higher-income households, due to its “value and convenience proposition.”
Grocery items make up about 60% of Walmart’s US sales, and last quarter the company introduced a private-label line of “Better Goods” products that offer healthier, higher-quality items priced at $5.
The company’s private-label penetration rate increased 30 basis points during the quarter, and Rainey said the team is “very encouraged by customer acceptance of our new brands.”
CFRA analyst Arun Sundaram said Walmart is trying to hold on to the higher-income customers it’s gained by making shoppers think, “Hey, this isn’t the Walmart of 10 or 15 years ago.”
“You have to keep in mind that Walmart primarily sells groceries and household goods and is gaining market share, so what they’re experiencing will be a little different than what other retailers are experiencing,” UBS analyst Michael Lasser told Yahoo Finance.
The company said it still saw “some inflation” in the grocery category last quarter and is working with suppliers to reduce costs.For general merchandise, lower-income shoppers are more price-conscious, while higher-income shoppers are starting to buy more discretionary items online and are willing to pay for the convenience that comes with the Walmart+ membership model, McMillon said on the earnings call.
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In the overseas business, sales increased by 7.1% due to an expansion in the number of stores and online business.
Revenue Breakdown
According to Bloomberg, here’s how Walmart reported its second-quarter fiscal 2025 numbers compared to Wall Street expectations:
Revenue: $169.34 billion vs. $168.46 billion
Adjusted earnings per share: $0.67 vs. $0.65
Overall U.S. same-store sales growth: 4.30% vs. 3.41%
Walmart US same-store sales growth: 4.20% vs. 3.43%
Traffic: 3.6% vs. 2.82%
Ticket increase: 0.6% vs. 1.27%
E-commerce growth: 3% vs. 2.10%
Sam’s Club US same-store sales growth: 5.2% vs. 3.9%
Walmart now expects sales to grow between 3.75% and 4.75% and adjusted earnings per share to be between $2.35 and $2.43 for fiscal 2025. That compares with its previous outlook for net sales growth at the high end of 3% to 4% and adjusted earnings per share to be in the range of $2.23 to $2.37.
Rainey said back-to-school sales are off to a strong start, which is usually a good indicator of what the holiday season will be like.
Walmart shares are up 37% so far this year, compared with a 16% gain for the S&P 500 (^GSPC).
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter.Brooke DePalma Or email me at bdipalma@yahoofinance.com
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