Walmart reported second quarter net income of $ 4.276 billion or $ 1.52 per share for the period ending July 31. As net income was down 39% year-over-year, the retail giant topped consensus estimates by $ 1.57 per share, excluding a 26- loss adjustment of cent during the quarter.
Earnings per share was adjusted downward from $ 1.78 per share from ongoing stock investments.
Revenue was $ 141.048 billion in the fiscal quarter, up 2.4% from $ 137.742 billion a year ago. Revenue was also higher than analysts’ expectations, in part due to a 28% increase in Sam’s Club member revenue and triple-digit growth from Walmart Connect, the new advertising platform service.
Walmart’s product sales in the United States rose 5.2%, beating estimates by 4.3%, with e-commerce accounting for 2% of that total. The retailer said store traffic increased 6.1% in the quarter, while the average ticket was down 0.8%. Over a two-year stack, songwriting sales increased 14.5%, driven by a 6.1% increase in traffic.
Product sales in the United States have benefited from demand for groceries and the back-to-school season which Walmart says continues through August. E-commerce sales are up 6% from a year ago and 103% over a two-year period. While store shelves are still scarce in many places at times, Walmart said inventory was up 20% year over year. The gross margin fell to 24.8%, lower than the consensus estimate of 25.2%.
Walmart said it gained market share in grocery stores in the quarter, with stores selling record levels of fresh produce and food. Walmart US reported net sales of $ 98.2 billion, up 5.3% from a year ago. Operating profit totaled $ 6.1 billion, up 20% year-over-year.
âWe had another strong quarter in all areas of our business. Our global e-commerce sales are on track to reach $ 75 billion by the end of the year, further strengthening our position as an omnichannel leader, âsaid Walmart CEO Doug McMillon in his opening speech Monday during the call with analysts.
He said the company has added thousands of new sellers to its online marketplace, rapidly developed advertising business around the world, and found innovative new ways to market its data and develop its technology.
âWe have a unique ecosystem of products and services designed to serve customers in a broader and deeper way, and we are grateful to our associates for making it all possible,â said McMillon.
Walmart has also raised its outlook for sales of compositions in the United States to between 5% and 6% for the year leading up to what is expected to be a strong holiday season.
Sam’s Club was the shining star of the quarter with net sales of $ 18.6 billion, up 13.9% year-over-year. Sales of Fuel-Free Comp increased 7.7%, up 21% on a two-year stack basis. Transactions increased 5.1% while notes increased 2.5% during the quarter. E-commerce contributed 1.8% of the total number of item sales over the period. Operating profit increased 11.5% to $ 700 million in the quarter.
McMillon said the Sam’s Club has great momentum, as much as it has never seen in the past 19 years since starting his role as Sam’s Club buyer. He said Sam’s continues to be an innovation driver for Walmart with the recently deployed âAsk Samâ technology in supercenters to help employees better serve customers.
Walmart’s international division posted total revenue of $ 23 billion, down 15% from a year ago, mainly due to divestments of $ 8.9 billion. Operating income was $ 900 million, up 6% over the period. McMillon said much of the world outside of the United States continues to struggle with the challenges of COVID and that Walmart performs well under these circumstances.
McMillon told analysts that Walmart will continue to invest in its people, technology and supply chain and that investments must not come at the expense of profits. He said Walmart is more than just a retailer who buys and sells goods, as it can leverage many other revenue levers with its growing service business.
Ben Bienvenu, an analyst at Stephens Inc., expected Wall Street to ask Walmart about the timing of its equity investments that squeezed gross margins and slowing e-commerce sales in the quarter.
âBut these are very strong results and we believe this team continues to make solid progress in terms of earnings growth and creation of shareholder value. We reiterate our overweight – buy rating and the price target of $ 170 is being revised, âBienvenu said following the results announcement.
Shares of Walmart (NYSE: WMT) opened higher Monday at $ 151.54, up 79 cents in the morning session. Since the start of the year, stocks are up 4.5%. Over the past 52 weeks, the shares have traded between $ 153.66 and $ 126.28.