Walmart reported U.S. Q2 comp sales grew 5.2 percent year-over-year and gained 14.5 percent on a two-year stack. The retail giant raised its outlook for the second consecutive quarter, expecting FY22 Walmart U.S. comp sales of 5 percent to 6 percent and global eCommerce sales of $75 billion.
Highlights of the quarter include:
- Total revenue was $141.0 billion, up 2.4 percent, negatively affected by approximately $8.9 billion related to divestitures. Excluding currency, total revenue would have increased 0.6 percent to $138.6 billion.
- Walmart U.S. grew market share in grocery. Comp transactions were strong at 6.1 percent, led by stores.
- Walmart U.S. operating income increased 20.4 percent. Adjusted operating income increased 12.0 percent.
- Walmart U.S. eCommerce sales grew 6 percent and 103 percent on a two-year stack.
- Strong growth in advertising businesses globally, including nearly doubling sales in Walmart U.S. versus last year.
- Sam’s Club comp sales increased 7.7 percent, and eCommerce sales grew 27 percent. Membership income increased 12.2 percent with membership reaching an all-time high.
- Walmart International’s net sales were $23.0 billion, a decrease of $4.1 billion, or 15.2 percent, negatively affected by $8.9 billion related to divestitures. Changes in currency exchange rates positively affected net sales by approximately $2.4 billion.
- Consolidated gross profit rate decreased 15 basis points. Walmart U.S. increased 20 basis points. Consolidated operating expenses, as a percentage of net sales, declined 81 basis points. Adjusted declined 47 basis points.
- Consolidated operating income was $7.4 billion, an increase of 21.4 percent, with strength across the company.
- Consolidated operating income, as a percentage of net sales, increased 83 basis points. Adjusted increased 50 basis points.
- Repurchased $5.2 billion in shares year to date, representing around 25 percent of the $20 billion authorization announced earlier this year.
Doug McMillon, president and CEO, Walmart, said, “We had another strong quarter in every part of our business. Our global eCommerce sales are on track to reach $75 billion by the end of the year, further strengthening our position as a leader in omnichannel. We grew market share in U.S. grocery, added thousands of new sellers to our marketplace, rapidly grew advertising businesses around the world, and we’re finding innovative ways to commercialize our data and build technology. We have a unique ecosystem of products and services designed to serve customers in broader, deeper ways, and we’re grateful to our associates for making it all happen.”
Updated guidance calls for:
- Consolidated sales are now expected to be slightly positive in constant currency. Previously, consolidated sales were expected to decline low single-digits in constant currency.
- Comps at Walmart U.S. are now expected to be up 5 percent to 6 percent, ex. fuel. Previously, guidance called for up low single-digits, ex. fuel.
- Comps at Sam’s Club are now expected to be up 7.5 percent to 8.5 percent, ex. fuel and tobacco. Previously, guidance called for up low single-digits, ex. fuel and tobacco.
- Walmart International net sales are now expected to decline 21.5 percent to 22.5 percent in constant currency due to divestitures and increase 7 percent to 8 percent, excluding divestitures. Previously, guidance called for international sales to decline 20 percent to 25 percent in constant currency with divestitures and increase mid-single-digits, excluding divestitures.
- Consolidated operating income is now expected to increase 11.5 percent to 14 percent, excluding divestitures. Previously, consolidated operating income was expected to expand 9 percent to 11.5 percent in constant currency. Previously, consolidated operating income was now expected to increase mid-single-digits in constant currency or increase high single-digits, excluding divestitures in constant currency.
- Walmart U.S. operating income is now expected to increase in the range of of 11 percent to 13.5 percent. Previously, guidance called for an increase in high single-digits.
- EPS is now expected to range between $6.20 to $6.35. Previously, EPS was expected to increase high single-digits, or to increase low double-digits, excluding divestitures.
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