Walmart Shares Fall 9% as US Sales Growth Misses Estimates
Walmart raised its full-year outlook after quarterly revenue and adjusted earnings beat Wall Street estimates, but its shares fell about 9% as U.S. comparable…
Walmart stock fell about 9% on Thursday even after the retailer beat Wall Street estimates for quarterly revenue and raised its full-year outlook. Investors focused on slower U.S. comparable sales growth and the company’s sales guidance.
Walmart reported revenue of $187.94 billion for its fiscal second quarter, while global e-commerce sales rose 23%. U.S. comparable sales grew 2.6%, below the 3.5% increase analysts expected, according to FactSet.
The figures show a split in the retailer’s performance: online sales remained strong, but its core U.S. sales measure trailed expectations. That matters for shoppers because Walmart says it plans to put tariff refunds toward lower prices, even as higher fuel costs add pressure to its business.
“Our business is strong,” Chief Financial Officer John David Rainey told CNBC. “We feel really good about the progress we're making.”
Walmart’s shares closed about 9% lower Thursday. Yahoo Finance also reported a 9% decline, citing the slower pace of U.S. same-store sales growth.
Walmart stock faces sales and cost pressures
The company said its U.S. comparable sales were partly offset by a 0.8% headwind in health and wellness as price caps on certain drugs took effect. Yahoo Finance reported that, excluding health and wellness, comparable sales in core merchandise grew 3.4%.
Walmart also pointed to consumers making trade-offs as fuel prices rose. “So June was a little more obvious as we look at the quarter in terms of customers making trade-offs,” Rainey told investors, according to Yahoo Finance.
Shorter budgets are showing up in shopping choices.
Rainey said the retailer continues to see consumers stretched, especially by higher gas prices. Walmart has been lowering prices across categories, including beef. The company’s plan to use tariff refunds for further price cuts could offer some relief to shoppers, though it also faces just over $2 billion in incremental cost headwinds related to higher fuel prices this year.
Walmart said it was eligible for roughly $2.9 billion in tariff refunds and had just under $100 million yet to receive, according to Rainey’s comments to CNBC. The company expects the impact of using the funds to lower prices to be seen in the third quarter.
For that quarter, Walmart forecast net sales growth of 3% to 3.75% and adjusted earnings per share of 62 cents to 64 cents. The period includes the back-to-school season and the start of the retailer’s holiday plans, Yahoo Finance reported.
Higher annual outlook, cautious investor response
Walmart raised its full-year net sales growth forecast to between 4% and 5%, from its previous range of 3.5% to 4.5%. It expects adjusted earnings of $2.80 to $2.87 per share, compared with its prior guidance of $2.75 to $2.85.
For the fiscal second quarter, net income was $6.37 billion, or 80 cents per share, compared with $7.03 billion, or 88 cents per share, in the year-earlier period. Adjusted earnings were 81 cents per share. Revenue climbed from $177.40 billion a year earlier to $187.94 billion.
E-commerce growth came from areas including pickup and delivery, the third-party marketplace and advertising, CNBC reported. Yahoo Finance said online sales rose 24% in the U.S., above the expected 22% increase.
Rainey said consumers were still spending and that real wage growth was keeping pace, while describing shoppers as resilient. He also said Walmart wanted to bring prices down further and ease pressure on household budgets.
The company’s next test will be whether its price investments and higher sales forecast can offset fuel costs and maintain momentum as the third quarter unfolds.
Source: cnbc.com
