Walmart on Thursday unveiled the strongest growth in a key sales metric in more than a decade and said its US online division accelerated in the second quarter, sparking a sharp rally in its share price.
The Arkansas-based retailer said comparable store sales in the US rose 4.5 per cent — the strongest growth in more than 10 years driven by grocery, clothing and seasonal items — supported by warmer weather and traffic growth of more than 2 per cent in stores.
Total revenues rose 3.8 per cent from a year ago to $128bn topping expectations of Wall Street analysts polled by Thomson Reuters of $125.97bn. Its online sales in the US rose 40 per cent, compared with 33 per cent in the first quarter but slower than the more than 50 per cent growth recorded in the year ago period.
The upbeat results pushed shares in the retail heavyweight up 9.7 per cent in the opening minutes of trading in New York.
The company reported a net loss of $861m or 29 cents a share in the quarter ended in July, compared with a profit of $2.9bn or earnings of 96 cents a share in the year ago quarter. The company blamed a $4.5bn net loss from the sale of 80 per cent of Walmart Brazil, with a significant part of that loss tied to foreign currency translation. Earnings were also affected by an unrealised loss on equity investment in JD.com and US tax reform.
Adjusting for one-time items, earnings of $1.29 a share, topped analyst estimates of $1.22.
“We’re pleased with how customers are responding to the way we’re leveraging stores and ecommerce to make shopping faster and more convenient,” said chief executive Doug McMillon.
The company has updated its website to lure in more shoppers and is also working on improving its store operations by expanding home delivery in the US and rolling out click-and-collect locations for online grocery pick-ups.
Walmart expanded its battleground with Amazon earlier this year by pouring $16bn into Indian e-commerce company Flipkart. India’s online sales market is worth nearly $30bn today, but is set to grow 27.8 per cent a year for the next five years, according to Euromonitor.
More broadly, Walmart has redrawn its international playbook. The company agreed to sell a majority stake of Asda in the UK for a combination of shares and cash, as part of a merger with J Sainsbury. It has also abandoned markets such as Germany and South Korea.
Looking ahead, the company lifted its full-year outlook for US comparable sales to about 3 per cent, up from at least 2 per cent previously. The company also tightened its forecast for consolidated net sales to 2 per cent growth. However, its forecast for Walmart online sales in the US was unchanged at 40 per cent.
Walmart also nudged up its full-year adjusted earnings outlook to $4.90 to $5.05 a share, up from $4.75 to $5 a share previously.
