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Retail powerhouse Walmart had impressive second-quarter earnings which beat expectations and surged due to grocery and school-related sales.
Walmart (NYSE: WMT) released second-quarter earnings for this year, which surpassed expectations, owing chiefly to strong grocery sales and a solid start in back-to-school sales. The retail giant said its stores received an influx of related customers. Most of these customers were looking to buy items like apparel, luggage, and party supplies. According to company CFO, Brett Biggs, many of these eager spenders went several months without these items especially during the peak of the pandemic. However, they now look set to “(come) out of hibernation” as life gradually returns to normal. Biggs added that families are also purchasing items typically associated with schools and classrooms such as backpacks and lunchboxes.
Such strong numbers were reflected in the company’s second-quarter earnings which surpassed Wall Street’s expectations. Consequently, Walmart increased its forecast for the year and projected earnings per share between $6.20 and $6.35. In addition, it anticipates that same-store sales in Walmart US will increase from 5% to 6%, excluding fuel.
Despite these impressive showings for Q2, Walmart’s shares are currently down 1% in premarket trading. The retail giant earned $1.78 per share for the second quarter, which is 21 cents a share above estimates of $1.57. In addition, its revenue also came in above the consensus at $141.05 billion vs. $137.17 billion expected. Furthermore, comparable-store sales grew by a better-than-expected 5.2%.
Walmart Second Quarter Earnings Reveal Unchanged Customer Patterns
According to Biggs, the recent rise in Covid cases due to the delta variant did not change customers’ shopping patterns. However, the CFO added that the retail corporation is closely monitoring the situation.
Walmart CEO, Doug McMillon also commented on the recent upsurge in the sale of some items. In a news release, he remarked that Walmart took more market share in groceries, one of its core businesses. McMillon also stated that the retail giant made progress in new areas, one of which was increasing the number of online sellers on its third-party marketplace. In addition, the company nearly doubled advertising sales in Walmart US for the second quarter compared with the same period last year.
In 2020, Walmart saw a notable disruption in customer shopping, with limited store operational hours and customer concern for Covid. Most customers even had to rely on stimulus checks for shopping. In addition, the corporation reportedly lost some of its market shares to smaller, more conveniently placed grocery stores. Finally, many of Walmart’s brick-and-mortar-stores saw customers shift toward e-commerce and online stores.
However, the company claims to be regaining its market share as customers are returning to their old shopping patterns. Walmart US transactions grew by 6.1% in contrast to the average ticket which fell 1%.
A year earlier, the retail giant said its net income fell from $6.48 billion ($2.27 per share) to $4.28 billion (1.52 per share).