Walmart raises full-year outlook after beating sales estimates
Walmart Inc. set a high bar for other U.S. merchants by posting strong second-quarter sales and boosting its full-year outlook — even with the Trump administration escalating its trade war with China.
The shares rose as much as seven per cent on Thursday, the most intraday since last August.
Comparable sales excluding fuel for Walmart stores in the U.S. rose 2.8 per cent in the period, beating analysts’ estimates. Primarily driving the result was a higher average ticket, or how much each shopper spent, and market share gains in food, wellness items and toys.
The results were “very solid,” said Chuck Grom, an analyst at Gordon Haskett Research Advisors. The same-store sales and higher guidance “reinforced our view that Walmart is a good investment on a standalone basis, but also offers a safe haven today amid a significant amount of market, consumer and retail uncertainty.”
One of the big questions heading into the results was how the trade war would impact the world’s largest retailer. But Walmart brushed off the concerns by giving more optimistic guidance on comparable sales and earnings per share.
Walmart’s results, along with economic data released Thursday that showed stronger-than-expected U.S. retail sales in July, helped calm fears that the country is headed into recession. Walmart’s earnings also provided a counterpoint to more dismal sales figures from Macy’s Inc. and J.C. Penney Co.
The company has used its scale to minimize price increases, while reducing price tags in areas like food, chief financial officer Brett Biggs said. Overall, inflation at Walmart has been “pretty benign,” he added.
“We’ve protected our consumers really well,” Biggs said.
It now sees comparable sales at the higher end of its previous 2.5 per cent to three per cent range, while earnings per share could now either increase or decrease slightly this year, compared with an earlier expectation of a low single-digit decline when including the impact of its Flipkart transaction.