NEW YORK — Walmart experienced another strong quarter, exceeding nearly all sales expectations. The retailer’s comparatively low prices proved a powerful draw for millions of consumers struggling with rising costs in housing, groceries, and other essential items.
The nation’s largest retailer also raised its full-year outlook, indicating confidence in its business model.
Walmart Inc. reported earnings of $4.5 billion, or 56 cents per share, for the three months ending July 31. This compares to $7.9 billion, or 97 cents per share, in the same period last year. Adjusted per share earnings reached 67 cents, exceeding Wall Street’s expectations by 2 cents, according to FactSet.
Sales increased nearly 4.8% to reach $169.33 billion, surpassing expectations as well.
Comparable store sales, encompassing online and stores open for the past 12 months, rose 4.2% in the U.S. This compares to a 3.8% increase in the first quarter and a 4% rise in the fourth quarter.
Global e-commerce sales surged 21%, maintaining the pace set in the first quarter.
Both the number of transactions and the average amount spent per transaction at Walmart were higher than during the same period last year.
In a potentially positive shift, Walmart reported that sales of discretionary items, such as clothing and electronics, were flat to very slightly positive. For the past two years, American consumers have focused heavily on essentials, forgoing non-essential purchases and allocating that spending to groceries and other necessities.
Before the market opened on Thursday, Walmart shares surged 6%, boosting the Dow Jones Industrial Average.
Walmart, headquartered in Bentonville, Arkansas, is among the first major U.S. retailers to report quarterly results. These results offer insight into consumer spending patterns and suggest that the red-hot U.S. economy may finally be cooling.
U.S. employer hiring declined unexpectedly sharply in July, and the unemployment rate rose for the fourth consecutive month. This trend is attributed to the impact of higher interest rates on businesses and households. The strong U.S. economy has been a primary driver of global economic growth, and the U.S. job market has provided Americans with the financial resources to maintain spending.
The Labor Department reported on Wednesday that year-over-year inflation reached its lowest level in over three years in July, suggesting that the worst price spike in four decades is fading. This development could pave the way for a potential interest rate cut by the Federal Reserve in September. However, prices haven’t decreased overall, and consumers are still facing financial challenges.
The effects of these higher costs have become evident in the performance and sales figures of U.S. retailers.
Home Depot reported its quarterly results on Tuesday and noted that customers are continuing to curb spending.
Walmart has stepped up its discount strategy. During the most recent quarter, the retailer implemented 7,200 price rollbacks, with a 35% increase in the number of rollbacks on food items.
In July, Walmart launched its most significant store-label food brand in 20 years, offering a wide range of items. The goal is to reach younger consumers who may not be loyal to specific grocery brands and are seeking to reduce their grocery bills. Walmart anticipates having a total of 300 products under the Bettergoods label by the fall, covering a range from frozen foods and dairy to coffee and chocolate.
For the back-to-school season, Walmart revamped its 30-year-old No Boundaries brand to appeal to Gen Z customers. This rebranding is part of a strategy to position Walmart as a destination for cool clothing alongside groceries.
For the entire year, Walmart anticipates earnings per share to be in the range of $2.35 to $2.43. This represents an increase from its previous estimate of $2.23 to $2.37 per share. Analysts had projected $2.44 per share, according to FactSet.
The retailer is projecting annual sales growth of 3.75% to 4.75%. Previously, Walmart expected sales to rise 3% to 4%.
