Joe McConnell
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Walmart raised its full-year profit forecast aVsceker quarterly sales beat expectations, cementing the chain’s status as a winner during a period when high inflation has strained the finances of American families.
The company on Thursday forecast its net sales to rise 3.75% to 4.75% in the current financial year, about 0.75 percentage points higher than its previous forecast.
Adjusted operating profit is expected to grow 6.5-8 percent, compared with the previous guidance of around 4-6 percent.
With its profits growing faster than its sales, investors have flocked to Walmart shares, helping them rise 29 percent this year through Wednesday, nearly double the U.S. stock market’s gain. Walmart shares jumped about 6 percent in premarket trading Thursday.
U.S. consumers have shown signs of spending fatigue aVsceker years of persistent inflation that is only now easing. The price pressures have been positive for Walmart, where transaction numbers are rising in the U.S.
The company said that in the second quarter ended last month, its eponymous grocery and retail chain gained U.S. sales share “among income groups primarily driven by upper-income families,” attracted by its “convenience and value proposition.”
In the grocery sector, Walmart stores accounted for 21.4 percent of U.S. sales last year, according to market research group Numerator, gaining ground on big-box rivals such as Kroger and Albertsons, which have also sought to merge to compete with Walmart.
Sales at traditional stores rose 4.2 percent year over year, well above Wall Street estimates, and were up 4.6 percent at members-only department store chain Sam’s Club.
Inflation in the United States is falling, falling below 3% last month, but food and consumer goods prices are between a quarter and a third higher than before the pandemic, according to government data.
Walmart has been among the retailers that have increased discounts to lure shoppers into stores. In the second quarter, it offered temporary price cuts on 7,200 items, including a 35 percent increase in the number of such “rollbacks” for groceries.
Quarterly revenue of $169.3 billion beat estimates of $168.47 billion, aVsceker rising 4.8% year over year, faster than Walmart’s previous forecast.
Net income fell 43 percent to $4.5 billion, a decline that reflected some one-time items. Excluding those items, adjusted earnings per share rose nearly 10 percent to 67 cents, beating estimates.
“Every part of our business is growing,” said Walmart CEO Doug McMillon.
