Walmart recently reported its slowest growth in U.S. comparable sales in six years. The company’s cautious forecast for the year sent shares tumbling 6% before the stock market opened on Thursday. In the second quarter, comparable sales at U.S. stores increased by 2.6%. This figure includes stores open for at least a year along with online sales linked to those locations. The previous quarter saw a rise of 4.1%.
When excluding the wellness category, which involves Walmart’s pharmacies, comparable sales went up by 3.4% in the second quarter. Federal legislation requiring pharmacies to provide certain high-cost Medicare drugs at fixed prices affected these sales. Analysts, according to FactSet, had expected a 3.8% increase.
Walmart’s U.S. e-commerce branch grew by 24%, slightly below the first-quarter growth rate of 26%. Being among the first major retailers to release second-quarter results, Walmart provides a perspective on whether ongoing pricing pressures, such as those from the Iran conflict, are influencing consumer spending.
Walmart serves as a significant indicator of consumer behavior due to its large clientele, with over 150 million customers visiting its website or stores weekly. This quarter gathered more scrutiny following U.S. data showing unexpectedly weak retail sales in July. Additionally, a new report from the University of Michigan highlighted growing economic pessimism, with many Americans coping with rising costs across various expenses.
FactSet data revealed Walmart’s smallest gain in comparable store sales since a 1.9% rise for the quarter ended January 31, 2020. Walmart has expanded its customer base, increasingly attracting wealthier households with incomes exceeding $100,000.
For the quarter ending July 31, Walmart recorded a net income of $6.37 billion or 80 cents per share. Adjusted per-share earnings stood at 81 cents, exceeding Wall Street expectations of 74 cents, as reported by FactSet. Sales grew by 5.9% to $187.94 billion, surpassing the anticipated $186.62 billion.
For the third quarter, Walmart forecasts earnings per share between 62 cents and 64 cents, with sales anticipated to rise by 3% to 3.5%. Sales are projected to fall between $184.88 billion and $186.23 billion. These predictions are below analysts’ estimates of 68 cents per share and sales of $188.19 billion based on FactSet data.
For the full year, Walmart expects earnings per share to range from $2.80 to $2.87, with sales anticipated to grow by 4% to 5%. Consequently, sales are expected to range from $741.7 billion to $748.8 billion. Analysts had forecasted $2.90 per share and sales of $752.06 billion for the year, according to FactSet.