Joe Raedle
Walmart (NYSE:WMT) gained in early trading on Thursday after sliding past consensus estimates with its Q2 earnings report on revenue growth of %5.9%.
The retailer reported total U.S. comparable sales rose 6.4% in Q2 to top the consensus estimate for a 4.0% increase. Transactions were up 2.9% during the quarter, and the average ticket was 3.4% higher. E-commerce contribution to comparable sales was down 230 basis points from a year ago as the post-pandemic shift continued. Comparable sales rose 5.5% at Sam’s Club locations in the U.S. off transaction growth of 2.9% and 3.5% growth in average ticket. Walmart International saw total sales increase 13.3% to $27.6B during the quarter.
Walmart’s (WMT) consolidated gross margin rate was up 50 basis points to 24.0% of sales on lapping elevated markdowns and supply chain costs, partially offset by ongoing mix pressure in the grocery and health & wellness segments. Consolidated operating expenses as a percentage of net sales increased 33 basis points during the quarter. Consolidated operating income was up 6.7% and adjusted operating income was up 8.1%. All three business segments saw an increase in operating income during the quarter. EPS rose 4.0% to $1.84 vs. the consensus mark of $1.71.
CEO update: “Food is a strength, but we’re also encouraged by our results in general merchandise versus our expectations when we started the quarter. Our associates helped deliver increases in transaction counts and units sold, and profit is growing faster than sales. We’re in good shape with inventory, and we like our position for the back half of the year.”
Walmart (WMT) ended the quarter with a cash position of $13.9B and total debt of $50.4B. Free cash flow was up to $9.0B from $1.8B a year ago.
Looking ahead, Walmart (WMT) expects Q3 sales to increase 3% year-over-year and adjusted EPS in the range of $1.45 and $1.50 vs. the consensus mark of $1.49. For the full year, sales are forecast to increase by 4% to 4.5% and adjusted EPS to be in the range of $6.36 and $6.46 vs. consensus of $6.27 and the prior guidance range of $6.10 to $6.20,
Separately, the company announced that Walmart International CEO Judith McKenna will retire, effective in January of 2024. Beginning on September 11, McKenna will transition out of the role. Kathryn McLay was appointed Executive Vice President, President and Chief Executive Officer, Walmart International, effective on September 11.
Shares of Walmart (WMT) rose 1.85% premarket on Tuesday to $162.03. Target (TGT) was up 0.55% and Costco (COST) showed a 0.51% gain.
