Top retail chain Walmart (WMT) easily beat earnings estimates for its fiscal second quarter and the big-box retailer’s same-store sales also beat views, but U.S. e-commerce sales slowed sharply. Walmart stock ended flat.
The report comes after the Biden administration announced a major boost to food-stamp benefits, or the Supplemental Nutrition Assistance Program. Walmart is the top seller of groceries in the U.S.
Estimates: Wall Street expects earnings to rise by a penny to $1.57 per share, according to FactSet. Revenue is seen falling 0.5% to $137 billion. Same-store sales (ex gas and forex) are seen rising 3.6%, according to Consensus Metrix. Walmart U.S. comps are expected to grow 3.7%, with Sam’s Club comps up 2.4%.
Results: Walmart earnings increased 14% to $1.78. Revenue rose 2.4% to $141 billion and rose 0.6% in constant currency. U.S. same-store sales grew 5.2%, with Sam’s Club comps up 7.7%, both down sharply from the year-ago, pandemic-influenced quarter.
In Q2, U.S. e-commerce sales grew 6%, down from 37% in Q1 and down from 69% in Q4 2020. International sales fell 15% amid divestitures.
In Q2, Walmart was expected to benefit from a strong back-to-school shopping season as well as the child tax credit. Visits in July rose 2.9% vs. the same month in 2019, while visits at Target grew 15.9% for that period, according to data firm Placer.ai.
Outlook: Walmart projects EPS of $6.20-6.35 for the full year vs. an earlier view for an increase in the “high single digits.” Analysts were expecting Walmart earnings to grow 9.5% to $6.00 in fiscal 2022, FactSet says. Walmart forecasts Q3 EPS of $1.30-$1.40, which at the midpoint is above views for $1.32.
Shares initially sold off, then turned positive, but closed flat at 150.70 in Tuesday stock market action. Walmart stock is working on a 153.76 buy point in a 38-week consolidation around the 50-day line, according to MarketSmith chart analysis. Amazon (AMZN) fell 1.7%, and Target (TGT), due Wednesday, lost 2.9%.
Last September, Walmart launched Walmart+, its latest effort to take e-commerce share from Amazon as more consumers shop online.
Walmart was a retail coronavirus stock winner. As an essential business, it stayed open during lockdowns, while investing heavily in its e-commerce business during the online shopping boom. Now it’s looking to hire a cryptocurrency chief, to develop its digital currency strategy.
Wage inflation is a concern. A week ago, Walmart said it will offer special bonuses and pay raise to retain warehouse workers.
Looking ahead, Walmart stock should gain from a broad shift towards more defensive stocks, some analysts say.
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