Walmart Q2 Profit Declines 34%, But Results Top Estimates
Retail giant Walmart Inc. (WMT) reported Tuesday a profit for the second quarter that declined 34 percent from last year, hurt by lower margins and higher expenses. However, adjusted earnings per share and quarterly revenues topped analysts’ expectations. The retailer also raised its guidance for the for the full-year 2022.
“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,” said Doug McMillon, President and CEO.
Consolidated net income attributable to Walmart for the quarter was $4.27 billion or $1.52 per share, lower than $6.48 billion or $2.27 per share in the prior-year quarter.
Excluding items, adjusted earnings for the quarter were $1.78 per share, compared to $1.56 per share in the year-ago quarter.
On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $1.56 per share for the quarter. Analysts’ estimates typically exclude special items.
Total revenue for the quarter, comprising net sales and membership and other income, grew 2.4 percent to $141.05 billion from $137.74 billion in the same quarter last year. Revenues edged up 0.6 percent to $138.6 billion in constant currency. Analysts were looking for revenues of $136.88 billion for the quarter.
Total revenue was negatively affected by approximately $8.9 billion, related to recent divestitures at Walmart International. Changes in currency exchange rates positively affected net sales by approximately $2.4 billion.
Net sales grew 2.2 percent to $139.87 billion, and Membership and other income increased 28.2 percent to $1.18 billion from last year. Consolidated U.S. comp sales, without fuel, increased 5.5 percent.
Walmart U.S. comp sales increased 5.2 percent and net sales rose 5.3 percent to $98.19 billion, led by market share gains in grocery. Walmart U.S. eCommerce sales grew 6 percent.
Sam’s Club comp sales increased 7.7 percent and net sales also grew 13.9 percent to $18.64 billion from last year. Membership income increased 12.2 percent, with total member count reaching an all-time high.
However, net sales at Walmart International declined 15.2 percent to $23.04 billion, and also decreased 24.0 percent to $20.64 billion in constant currency. eCommerce sales increased 27 percent.
Consolidated gross profit rate decreased 15 basis points.
Looking ahead the third quarter, the company now expects earnings in a range of $1.30 to $1.40 per share on Walmart comp sales growth of 6 to 7 percent, excluding fuel. Analysts are looking for earnings of $1.31 per share for the quarter.
For fiscal 2022, the company now projects adjusted earnings, excluding divestitures, in a range of $6.20 to $6.35 per share on slightly positive consolidated net sales in constant currency and consolidated net sales growth, excluding divestitures, of 6 to 7 percent, or more than $30 billion.
Previously, the company expected earnings per share to increase in the high single digits and adjusted earnings per share, excluding divestitures, to grow in the low double-digits on consolidated net sales growth in the low-to-mid single digits, with a low single digits decline in constant currency.
The Street is looking for earnings of $6.02 per share on a revenue decline of 0.8 percent to $554.71 billion for the year.
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