Walmart posts revenue growth in Q2

Walmart posted second-quarter results, including strong revenue and operating income growth of 5.7% and 6.7%, respectively. The Fayetteville, Ark.-based company said it sees strength in its omnichannel model across segments with strong comp sales globally, including 6.4% for Walmart U.S.

Walmart raised its guidance for the fiscal year 2024 to reflect its second-quarter upside, citing confidence in continued business momentum and ongoing customer response to its value proposition.

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“We had another strong quarter. Around the world, our customers and members are prioritizing value and convenience. They’re shopping with us across channels — in stores, Sam’s Clubs, and they’re driving eCommerce, which was up 24% globally. 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,” said Doug McMillon, president and CEO of Walmart.

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Among the second quarter highlights:

• Consolidated revenue of $161.6 billion, was up 5.7%, or 5.4% in constant currency;
• Consolidated gross margin rate up 50bps on lapping elevated markdowns and supply chain costs, partially offset by ongoing mix pressure in grocery and health & wellness;
• Consolidated operating expenses as a percentage of net sales grew 33bps;
• Consolidated operating income was up $.5 billion, or 6.7%, adjusted operating income was up 8.1%;
• Global advertising business grew by approximately 35%; and
• Walmart U.S. comp sales were up 6.4%; eCommerce was up 24%, led by pickup & delivery.

Walmart U.S.:

• Growth in e-commerce of 24%, with strength in pickup & delivery and advertising;
• Walmart Connect advertising sales grew 36%;
• Sales strength was led by grocery and health and wellness, while general merchandise sales declined modestly;
• Gained market share in grocery with strong unit growth;
• Gross profit rate increased by 40 bps, partially offset by operating expense deleverage of 28 bps; and
• Inventory declined 8% with higher in-stock levels.

Walmart International:

• Strong growth in net sales cc, led by Walmex, China and Flipkart. Positive traffic across markets;
• Growth in eCommerce sales of 26% with strength in store-fulfilled;
• Gross margin rate declined 37 bps over last year on changes in the format and channel mix;
• Advertising is up nearly 40%;
• Operating expense leverage of 129 bps on strong growth in net sales, driving fixed cost leverage; and
• Operating income cc up 2.2%, impacted 20 percentage points from lapping last year’s $0.2 billion one-time insurance benefit in Chile.

Sam’s Club U.S.:

• Strong comp sales, led by food and consumables, and health care as well as positive unit growth overall;
• Gained market share in grocery and general merchandise, including apparel, home and toys;
•  Growth in eCommerce of 18% led by curbside;
• Strong growth in membership income, was up 7%, with continued strength in Plus member growth and renewals;
• Advertising was up 33%; and
• Membership count increased mid-single-digits with Plus penetration up 130 bps vs. last year.

For the third quarter, Walmart expects adjusted EPS of $1.45 to $1.50.

For the fiscal year 2024, Walmart expects adjusted EPS of  $6.36 to $6.46, including an expected $0.05 impact from LIFO.

For the third quarter, Walmart expects consolidated operating income to increase by approximately 1%; for the fiscal year 2024, the retailer expects operating income to increase by approximately 7%-7.5%, including an expected 30bps tailwind from LIFO.