Walmart Rides Strong Consumer Spending to Faster Sales Growth --Update
August 16 2018 - 8:55AM
Dow Jones News
By Sarah Nassauer
Walmart Inc. said sales rose at the fastest rate in over a
decade as the world's largest retailer continues to draw more
people to stores and benefit from strong consumer spending boosting
performance at many retailers.
Sales at existing U.S. stores and websites rose 4.5% during the
second quarter ended July 31. Walmart also said it expects sales
and profit to rise more than previously expected during the current
fiscal year. Sales in existing U.S. stores will rise 3%, the
retailer said.
Buoyed by rising wages and employment, plus a tax cut, all of
which have translated into disposable-income gains, consumers are
spending again with more abandon than they have in years.
Other retailers including Home Depot Inc. and Macy's Inc. said
earlier this week sales rose in the second quarter. Home Depot
raised its earnings and sales targets for the year due to rising
home-improvement purchases and a strong U.S. economy.
Walmart shares have fallen over 8% so far this year, dropping
most precipitously since February when the retailer reported a
slowdown in ecommerce sales growth during the fourth quarter.
Shares surged 10% in premarket trading to $99.61.
Walmart said its quarterly U.S. ecommerce sales picked up
compared with earlier this year, rising 40% versus the same quarter
last year, up from 33% during the first quarter and in line with
the retailer's expectations.
"Customers tell us that they feel better about the current
health of the U.S. economy as well as their personal finances,"
said Walmart Chief Executive Doug McMillon in an earnings release.
"They're more confident about their employment opportunities."
Walmart said fresh-food sales were particularly strong, while
warm weather helped spur purchases of lawn, garden and pool
products along with clothing.
That corresponds with trends reported by other retailers, as
well as industry-wide trends. The Commerce Department said
Wednesday that July retail sales -- a measure of spending at U.S.
stores, websites and restaurants -- rose 6.4% compared with the
previous year.
Walmart, which booked $128 billion in total quarterly sales, has
invested heavily in recent years to grow sales online around the
globe to fend off Amazon.com Inc. That has helped the chain rise
above the sales slump suffered by other brick-and-mortar retailers
facing new consumer buying behavior. This quarter marked over three
years of quarterly sales growth for Walmart.
But the retailer continues to invest heavily online and to lower
product prices versus competitors, while facing rising commodity
and transportation costs. In the second quarter operating income
fell 3.7% to $5.8 billion.
Walmart is leaning on the profits of U.S. stores to grow online,
said Chief Financial Officer Brett Biggs in an earnings release.
The company expects ecommerce loses this year to be higher than
last, he said.
Walmart said its per-share earnings for the full year would hit
$4.90 to $5.05, up from a previously expected range of $4.75 to $5.
Walmart reiterated that its planned investment in Indian ecommerce
company Flipkart would reduce full-year per-share earnings by 25
cents to 30 cents.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
August 16, 2018 08:40 ET (12:40 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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