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Walmart Q2 Profit Up 20%; Revenues Top Estimates

walmart jun07 16aug22 lt

Retail giant Walmart Inc. (WMT) reported Tuesday a net profit for the second quarter that grew 20.4 percent from last year, reflecting lower operating expenses and partially inflation driven revenue growth. The results were also driven by the rebound in international markets. Quarterly revenues topped analysts' expectations. The retailer also raised its adjusted earnings guidance for the full-year 2023.

"The actions we've taken to improve inventory levels in the U.S., along with a heavier mix of sales in grocery put pressure on profit margin for Q2 and our outlook for the year. We made good progress throughout the quarter operationally to improve costs in our supply chain, and that work is ongoing," said Doug McMillon, President and CEO.

Consolidated net income attributable to Walmart for the quarter was $5.15 billion or $1.88 per share, higher than $4.28 billion or $1.52 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter were $1.77 per share, compared to $1.78 per share last year.

Total revenue for the quarter, comprising net sales and membership and other income, grew 8.4 percent to $152.86 billion from $141.05 billion in the same quarter last year. Revenues grew 9.1 percent to $153.9 billion in constant currency. Analysts were looking for revenues of $150.75 billion for the quarter.

Net sales grew 8.2 percent to $151.38 billion, and Membership and other income increased 25.6 percent to $1.48 billion from last year. Consolidated U.S. comp sales increased 7.0 percent.

Walmart U.S. comp sales increased 6.5 percent and net sales rose 7.1 percent to $105.13 billion, led by market share gains in grocery. Walmart U.S. eCommerce sales grew 12 percent.

Sam's Club comp sales increased 9.5 percent and net sales grew 17.5 percent to $21.90 billion from last year. Membership income increased 8.9 percent with member count at an all-time high.

Net sales at Walmart International also grew 5.7 percent to $24.35 billion, and increased 9.9 percent to $25.31 billion in constant currency. Net sales at Walmart International were negatively affected by $1.0 billion. It reported double-digit comps in three largest markets of Mexico, Canada, and China.

Consolidated operating expenses as a percentage of net sales decreased 45 basis points, primarily due to strong sales growth partially offset by wage investments.

Looking ahead the third quarter, the company now expects adjusted earnings per share to decline 9.0 to 11.0 percent. It also expects consolidated net sales growth of about 5 percent, with Walmart U.S. comp sales growth of about 3 percent, excluding fuel. Analysts expect revenues of $145.61 billion for the quarter.

The company maintained its expectations for Walmart U.S. comp sales growth, excluding fuel, of about 3 percent in the back half of the year.

Looking ahead to fiscal 2023, the company now projects adjusted earnings to decline about 9 to 11 percent and about 8 to 10 percent, excluding divestitures.

It also expects consolidated net sales growth of about 4.5 percent in constant currency and about 5.5 percent, excluding divestitures, with Walmart U.S. comp sales growth of about 4 percent, excluding fuel.

Previously, the company expected adjusted earnings to decline about 11 to 13 percent and about 10 to 12 percent, excluding divestitures. It also expected consolidated net sales growth of 4.5 percent in constant currency and about 5.5 percent, excluding divestitures, with Walmart U.S. comp sales growth of about 3.5 percent, excluding fuel.

The Street is looking for revenue growth of 4.3 percent to $597.24 billion for the year.

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