Walmart’s strong quarterly results tempered by tepid full-year outlook
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- Walmart reported Q2 net income of US$6.37-billion (80 cents/share; adjusted 81 cents), easily topping the 74 cents analysts expected per FactSet, on sales up 5.9% to US$187.94-billion.
- Shares slid nearly 6% in pre-market trading after Walmart guided full-year EPS to US$2.80-US$2.87, below the US$2.90 consensus, with Q3 EPS guidance of 62-64 cents also missing the 68 cents analysts expected.
- Comparable US sales rose 2.6%, decelerating from 4.1% in Q1; excluding the wellness/pharmacy category, comps grew 3.4%, with pharmacy sales hit by federal legislation requiring capped Medicare drug prices.
- US online sales grew 24%, down from 26% in the first quarter.
- Walmart's biggest market-share gains are now coming from households earning over US$100,000 a year, evidence that higher-income shoppers are trading down to the discount chain amid rising costs for gas and groceries.
Why it matters: When the country's largest retailer — serving 150 million weekly customers — beats earnings but cuts its full-year outlook, it carries outsized signal value: analysts and economists get a real-time read on whether July's weak retail sales and rising University of Michigan consumer pessimism are turning into a broader spending slowdown, dragging Walmart's stock nearly 6% before the bell.
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