NEW YORK — Walmart had another quarter of strong sales that exceeded almost all expectations, with its comparatively low prices proving to be a powerful draw for millions who fought with rising costs of housing, groceries and just about everything else.
The country’s largest retailer also raised its outlook for the full year, in a sign of confidence in its business model.
Walmart Inc. reported profit of $4.5 billion, or 56 cents per share, for the three months ended July 31. That compares to $7.9 billion, or $0.97 per share, in the same period last year. Adjusted earnings per share were 67 cents, or 2 cents better than Wall Street expected, according to FactSet.
Sales increased nearly 4.8% to $169.33 billion, also exceeding expectations.
Comparable store sales – which include online and stores opened in the last 12 months – increased 4.2% in the US, compared with 3.8% in the first quarter, and 4%, in the fourth quarter
Global e-commerce sales increased 21%, matching the pace of the first quarter.
The number of transactions and the average amount customers spent during each of those transactions at Walmart were higher than the same three months last year.
And in a potentially encouraging shift, Walmart said sales of discretionary items such as clothing and electronics were flat or slightly positive. For two years, Americans have maintained a sharp focus on the essentials, setting aside non-essential goods and spending that money on groceries and other basic items.
Before the opening bell on Thursday, Walmart shares rose 6%, pulling the Dow Jones Industrial Average with it.
Walmart, based in Bentonville, Arkansas, is among the first major U.S. retailers to release quarterly results and gives a glimpse into how Americans feel about their purchasing power, with signs that the hot U.S. economy could finally getting cold.
Hiring by US employers fell surprisingly sharply in July and the unemployment rate increased for the fourth consecutive month with higher interest rates affecting companies and families. The strong US economy has been one of the main drivers of global economic growth and the US job market has given Americans the financial resources to continue spending.
The Labor Department said Wednesday that annual inflation It hit its lowest level in more than three years in July, the latest sign that the worst price rise in four decades is fading and setting the Federal Reserve up for an interest rate cut in September. But that doesn’t mean that prices have fallen overall and that consumers are still struggling.
The impact of these higher costs has begun to manifest itself in the performance of North American retailers and their sales.
HomeDepot reported quarterly results on Tuesday and noted that customers continue to control spending.
Walmart has stepped up discounting, and during the most recent quarter, Walmart had 7,200 price reversals. There has been a 35% increase in the number of food reversals at Walmart.
In July, Walmart launched its biggest private label food brand in 20 years in terms of item variety, hoping to reach younger customers who are not loyal to supermarket brands and who are looking to cut spending on their grocery bill. Walmart said it expects to have a total of 300 products under the Bettergoods label by fall, from frozen foods and dairy products to coffee and chocolate.
For back to school, Walmart revamped its 30-year-old brand called No limits. to serve Gen Z customers. The No Boundaries rebrand is part of a strategy to get customers to think of Walmart as a place to buy cool clothes, along with with groceries.
For the year, Walmart said it now expects earnings per share to be in the range of $2.35 to $2.43. This represents an increase from the previous estimate of $2.23 per share to $2.37 per share. Analysts were projecting $2.44 per share, according to FactSet.
The retailer projects annual sales to increase between 3.75% and 4.75%. Previously, the company expected sales to increase 3% to 4%.
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