Walmart Inc. offered up some hope for brick-and-mortar in the second quarter.
While Walmart’s profits declined in the period the bottom line still topped Wall Street analyst expectations and the retail behemoth raised its outlook for the year for its U.S. business, including comparable-store sales, consolidated operating income and EPS, boosting the stock by more than 4 percent.
Same-store sales at Walmart U.S. grew 2.8 percent, fueled by e-commerce sales growth of 37 percent. Walmart U.S. comparable-store sales increased in the last 19 consecutive quarters, and the retailer logged record growth in the first quarter ended in July with a 3.4 percent increase in U.S. same-store sales, which was the highest gain in the period in the U.S. in nine years.
Walmart reported earnings per share in the second quarter of $1.27, a slight decline from $1.29 per share in the same period in the prior fiscal year, but stronger than the retailer’s guidance. Total revenue in the quarter increased 1.8 percent to $130.4 billion from $1.28 billion, an addition of $2.3 billion. Wall Street analysts predicted $1.22 per share on revenues of $130.2 billion, which would have represented a 1.7 percent increase.
The results also highlighted Walmart’s strengths and in some ways inoculated it against Amazon’s incursion. Grocery was one of the key areas of Walmart’s advances in e-commerce with expanded delivery capabilities.
“You’ve heard us talk about our NextDay delivery offer that launched a few months ago,” Walmart Inc. chief executive officer Doug McMillon said. “We set an original goal of serving about 75 percent of the U.S. population by year-end. We’ve already reached that annual goal and we’re working to expand it even further, including the available assortment.”
Profit declined $861 million to $3.6 billion. Walmart saw strength in its brick-and-mortar stores while logging 37 percent growth in e-commerce and projecting the same increase in the third quarter.
Sam’s Club comps were strong with an increase of 4.2 percent in the second quarter, and 10.7 percent on a two-year stacked basis, excluding fuel and tobacco. Walmart International delivered positive same-store sales in nine out of 10 markets.
Net sales at Walmart International declined 1.1 percent to $29.1 billion, and excluding constant currency, net sales rose 3.3 percent. Strength in Walmex and China were offset by softness in the U.K. and Canada. Operating income declined 2 percent, which was better than planned, the retailer said, adding that as it expected, the inclusion of Flipkart, the giant e-commerce business it acquired in India, negatively impacted profit results.
The retailer said each operating segment leveraged SG&A expenses.
McMillon began a pre-recorded conference call for analysts, saying: “Our hearts continue to be with our associates in El Paso [Texas] and Southaven [Mississippi] and we are focused on the safety of our associates and customers in all our stores and clubs. Those tragic and painful events will be with us forever, and our hearts go out to the families that were impacted.”
He continued to say that Walmart is “thinking through the broader issues related to gun violence and things we should do to help create safer communities. We would like for everyone to be reminded of the steps we’ve already taken” and went on to tick off points such as stopping to sell handguns in every state except Alaska in the Nineties and not selling military-style rifles such as AR-15s since 2015, among other things.