Walmart (WMT) -) on Thursday posted stronger-than-expected fiscal-second-quarter earnings and boosted its full-year profit forecast, as the retail giant's lower-priced products attracted value-focused shoppers who've pulled back on discretionary spending.
Adjusted earnings for the three months ended in July came in at $1.84 a share, up 4% from the year-earlier period and ahead of the Wall Street consensus forecast of $1.70 a share.
Group revenue was up 5.8% to $161.63 billion, again topping analysts' estimates of a $160.1 billion tally. U.S. same-store sales were up 6.4%, the retailer said, ahead of Wall Street's 4.5% forecast.
Operating profit improved 6.7% to $500 million. Gross margin widened 50 basis points (0.5 percentage point), even amid the rise in thinner-margin grocery sales. Growth in general-merchandise sales was "encouraging."
Looking into the second half of the fiscal year, Walmart sees earnings in the region of $6.36 to $6.46 a share, improving its previous forecast of $6.10 to $6.20 a share. Net thus should rise between 4% and 4.5%.
'Customers Prioritize Value': Walmart CEO McMillon
"We had another strong quarter. Around the world, our customers and members are prioritizing value and convenience," said CEO Doug McMillon.
"They’re shopping with us across channels — in stores, Sam’s Clubs, and they’re driving e-commerce, 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," McMillon added. "We’re in good shape with inventory, and we like our position for the back half of the year.”
Walmart shares were marked 0.75% higher in early Thursday trading immediately following the earnings release to change hands at $160.44 each, a move that would trim the stock's year-to-date gain to around 12%.
Walmart Contrast With Target
The near-term forecast boost, as well as the stronger-than-expected top-line growth, contrasts sharply with Walmart's smaller rival Target (TGT) -), which focuses on higher-end items and a wealthier customer base.
Target on Wednesday posted stronger-than-expected fiscal-second-quarter earnings, but slashed its full-year profit forecast as American consumers trim discretionary spending in the face of inflation pressures.
Analysts expect consumers to struggle with rising gas prices and soaring mortgage rates. They also face the end of a moratorium on student-loan payments, a factor that could take some $100 billion out of retail spending over the coming year.
Late Wednesday, Walmart unveiled a major executive change with the promotion of Kathryn McLay to CEO of its international business. She succeeds longtime industry veteran Judith McKenna, who retired.
McLay, 49, who previously ran Walmart's Sam's Club membership division, will assume the new role on Sept. 11, the company said.
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