Walmart raised its full-year sales and earnings outlook after posting stronger-than-expected fiscal second-quarter revenue, helped by e-commerce growth and roughly $2.9 billion in tariff refunds. The retailer plans to pass much of that refund on to shoppers through lower prices in the third quarter, even as it flags just over $2 billion in fuel-cost headwinds.
Walmart posted fiscal second-quarter revenue of $187.94 billion, above the $186.77 billion Wall Street had expected, and raised its outlook for the year on Thursday. Revenue climbed 5.9% from $177.40 billion in the same quarter last year, helped by a 23% jump in global e-commerce sales.
U.S. comparable sales grew 2.6%, short of the 3.5% increase analysts had projected. An 0.8% headwind in health and wellness weighed on the total, as price caps on certain drugs took effect during the quarter.
Walmart lifts full-year guidance
Walmart now expects full-year net sales to grow between 4% and 5%, up from its prior forecast of 3.5% to 4.5%. It also raised its adjusted earnings guidance to a range of $2.80 to $2.87 per share, compared with the previous outlook of $2.75 to $2.85. For the third quarter, the company projects net sales growth of 3% to 3.75% and adjusted earnings per share of 62 to 64 cents.
Tariff refunds fund lower prices
CFO John David Rainey told CNBC Walmart was eligible for roughly $2.9 billion in tariff refunds and has received all but less than $100 million of that total. Rainey said the company plans to use the money to lower prices for consumers, with the impact showing up in the third quarter. Rainey told CNBC: "We feel really good about the progress we're making."
He added that Walmart also expects to incur just over $2 billion of incremental cost headwinds tied to higher fuel prices this year.
E-commerce and membership gains
Walmart's membership and digital businesses kept expanding. Companywide membership fee revenue rose 17%, with Walmart+ net adds reaching a second-quarter high. Sam's Club U.S. net sales rose 8.8% to $25.7 billion as its membership fees climbed 6%, while global advertising revenue climbed 38%.
Net income fell to $6.37 billion, or 80 cents per share, compared with $7.03 billion, or 88 cents per share, a year earlier. Excluding a loss on investments and including a tax-related benefit, adjusted earnings per share came to 81 cents, though it was not immediately clear whether that compared to the 74-cent estimate Wall Street had penciled in.
Rainey said a significant portion of Walmart's 6.7% inventory increase reflected pricier, elevated brands as the company gained the most market share among high-income shoppers.
Source: US Top News and Analysis
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