sales rose and earnings beat estimates in the second quarter, pushing shares of the retail giant higher.
(ticker: WMT) posted adjusted earnings of $1.77 per share, beating analyst estimates of $1.63, according to FactSet. Sales of $152.9 billion in the quarter also beat the expected $150.9 billion. In the year-ago quarter, Walmart posted earnings of $1.78 per share on sales of $141 billion.
Walmart’s same-store sales increased 6.5% in the quarter. Sam’s Club, Walmart’s warehouse club, saw comparable sales rise 9.5%, beating Wall Street estimates of 10.1%.
Shares of Walmart jumped 4% in early trading to $137.89. On Tuesday, the stock fell 8.4% this year.
For the fiscal year, Walmart said it now expects adjusted earnings per share to decline between 9% and 11% in fiscal 2023, better than previous guidance which called for an 11% decline. to 13%, helped by the upbeat second quarter. The distributor maintains its forecasts for the second half.
That’s likely fueling today’s optimism, as well as the company’s comments on its conference call. While Walmart said it continued to see customers put the essentials first, it also noted that its inventory – which had prompted big discounts – had peaked last quarter and that it expects to a strong end to the back-to-school shopping season. He also said he would offer Paramount+ for free to Walmart+ subscribers, expanding the benefits of that program.
End of July, Walmart slashes earnings outlook for the second quarter and the full year. The company said rising inflation was forcing customers to spend more, hence the continued strength in sales, but it was not impacting the bottom line. With their budgets stretched, shoppers were focusing on the essentials and not buying things like clothes and home goods as easily as before. Walmart in turn had to offer steep, margin-eroding discounts to displace excess merchandise it had overordered, based on past consumer habits and continued supply chain disruptions.
Ami big box store
Although Walmart stock initially plunged in earnings, falling 7.6% on July 26, it then went on a long winning streak, only ending lower again on August 3. The shares hovered very close to where they were before the announcement.
Walmart also remains popular on Wall Street. Seventy-three percent of the 37 analysts tracked by FactSet have a buy or equivalent rating on Walmart, with an average price target of nearly $141. There is no bearish call on the stock.
And that optimism isn’t entirely misplaced, despite the headwinds for consumers. In 2008, Walmart was one of the ten best performing stocks in the
by total returns, which means many may believe it can outperform in a downturn, even if other retailers suffer.