Walmart reported strong second-quarter sales results as the retailer’s low-price model continues to attract budget conscious consumers in a tough economic environment.
The nation’s largest retailer boosted its annual outlook again, sending shares up as much as 2% before the opening bell Thursday.
Walmart, based in Bentonville, Arkansas, earned $7.89 billion, or $2.92 per share, for the three-month period ended July 31. Adjusted results were $1.84 per share, or 13 cents better than Wall Street had expected, according to a survey of industry analysts by FactSet. It was also up from last year’s quarterly profit of $5.15 billion.
Sale rose nearly 6% to $161.63 billion, a shade better than expected.
Comparable store sales — those from established stores and online operating over the past 12 months — rose 6.4% at Walmart’s U.S. division. That compares with 7.4% in the quarter ended April and the 8.3% during the fourth quarter. Global online sales surged 24%, down 2% from the previous period.
Sales for a lot of retailers have begun to fade as Americans pull back on discretionary spending for things like appliances, clothing or electronics. Target reported its first quarterly sales decline in six years on Wednesday.
Home Depot, the nation’s largest home improvement retailer, said Tuesday that sales continued to decline, led by purchases of big-ticket items like appliances and other things that often require financing. That’s become a problem with interest rates rising rapidly over the past year, making credit cards a much bigger burden for consumers.
This week, the U.S. reported that Americans increased their spending last month, but higher interest rates are weighing on economic activities that are highly dependent on credit, like sales of homes, vehicles, furniture and electronics.
Walmart is in a stronger position than many other retailers since more than 50% of its annual sales come from the non-discretionary category food. At Target, food is only 21% of annual sales.
But Walmart also has said shoppers remain cautious, trading down to private label goods from more expensive national brands.
Walmart slashed the price of its online subscription shopping service in half for those on government assistance, to keep those customers. Walmart said the Walmart+ service will cost $49 a year, or $6.47 per month for those on Medicaid, Social Security, the Supplemental Nutrition Assistance Program (commonly known as food stamps) or other programs. Its regular membership costs $98 annually.
Walmart launched its subscription service in 2020, and has been adding more perks as a way to compete with Amazon Prime, which was unveiled in 2005. Amazon’s annual membership now costs $139 per year, and it also has been adding benefits. The online retailer began offering discounts to those on government assistance in 2017.
Walmart said Thursday it expects sales to be up 3% and anticipates $1.45 per share to $1.50 per share for the current quarter. For the year, it now projects sales to be up 4% to 4.5% and shares to be $6.36 per share to $6.46 per share. In the previous quarter, it had projected sales to be up 3.5% and anticipated a per share range of $6.10 to $6.20 per share for the year.
Analysts had expected $1.49 per share for the current quarter and $6.30 per share for the year, according to FactSet.