A fourth consecutive quarter of same-store sales growth at Walmart’s U.S. business helped the company achieve a slightly better than expected profit performance.
Walmart said second-quarter earnings grew 8.3% to $1.18, one cent better than the consensus estimate of analysts and at the top of the company’s forecast range of $1.13 to $1.18. Total company sales increased 4.5% to $113.5 billion, and net income increased 5.7% to slightly more than $4 billion. The key driver of the improved performance was continued strength of the Walmart U.S. business where same-store sales increased 2.2%, within the company’s guidance range that called for an increase of 1% to 3%.
“I’m really pleased with the continued momentum we see in our Walmart U.S. stores, and this now marks three consecutive quarters of positive comp traffic and four quarters of positive comp sales,” said Wal-Mart Stores president and CEO Mike Duke. “There’s such a clear focus among the leadership team to drive the strategy of broad assortment and price leadership. We continue to win back customers and attract new ones. We will not let up on our passion to reduce operating expenses so that we can invest in lower prices. This is the promise that our customers expect from Walmart and what drives greater loyalty.”
Sales at U.S. stores grew 3.8% to $67.4 billion, while operating profits increased 5.3% to $5.25 billion.
“Customers are responding to our continued focus on providing the right assortment at everyday low prices,” said Walmart U.S. president and CEO Bill Simon. “During the quarter, our average comp traffic increase was equal to serving on average, 80,000 additional customers every day of the 13-week period.”
At Sam’s Club, sales increased 3.8% to $14.2 billion and same-store sales, excluding fuel, increased 4.2%, on top of a prior year increase of 5%. Operating profits grew at a much faster pace, advancing 10.1% to $536 million.
“We believe that the improvements in our quality and overall merchandise offerings are key to driving these results,” said Sam’s Club president and CEO Rosalind Brewer. “In fact, member engagement scores continue to achieve record levels. We’re also investing in price to deliver greater value on top of these quality improvements.”
Internationally, sales increased 6.4% on a constant currency basis to $32 billion and operating profits increased 5.4% to nearly $1.5 billion. A strengthening of the U.S. dollar had a major impact on the comparisons to the prior year. On a constant currency basis sales would have increased by 7.2% to $32.3 billion and operating profits would have increased 11.9% to $1.6 billion.
“Every market delivered positive comps, and I’m pleased that our largest markets, the United Kingdom, Mexico and Canada, collectively delivered stable growth, solid margins and expense leverage, despite challenging environments,” said Walmart International president and CEO Doug McMillon.
Buoyed by a solid second quarter showing, Walmart increased by a penny and narrowed its full year profit forecast to a range of $4.83 to $4.93 from a prior range of $4.72 to $4.92.