Walmart reports solid second-quarter sales and profits despite a challenging tariff environment

Independent

15 hours ago

Walmart Inc. reported increases in second-quarter profits and sales Thursday as it continues to pull in price-sensitive shoppers for everyday essentials like groceries despite a challenging tariff environment.
The Bentonville, Arkansas-based company, the nation's largest retailer, also increased its annual profit and sales outlook. It's among the first group of major U.S. retailers this week to report quarterly results that should shed more light on how consumers are coping with rising prices because of higher tariff costs.
The company said Thursday that it earned $7.03 billion, or 88 cents per share, for the three-month period ended July 31. That compares with $4.50 billion, or 56 cents per share, a year ago.
Sales rose nearly 5% to $177.40 billion.
A growing list of companies including Procter & Gamble, e.lf. Cosmetics, Black & Decker and Ralph Lauren have told investors in recent weeks that they plan to or have already raised prices because of tariffs, though modestly.
None of that has derailed consumer spending. Shoppers spent at a healthy pace in July, particularly at the nation's auto dealerships, even as President Donald Trump's tariffs start to take a toll on jobs.
However, some of that spending could have been shoppers buying furniture and other items to get ahead of the expected price increases, analysts said.
On Tuesday, Home Depot, the nation's largest home improvement retailer, reported improved sales during its latest quarter as consumers remained focused on smaller projects amid cost concerns and economic uncertainty.
But its performance missed Wall Street's expectations. The Atlanta-based company also said shoppers should expect modest price increases in some categories as a result of rising tariff costs, though they won't be broad-based.
Target, which has been struggling to reverse a persistent sales malaise, announced a new CEO to take over in February. It reported another decline in comparable sales and said would only raise prices as a last resort. Chief Commercial Officer Rick Gomez said shoppers are focusing on value and so the discounter is leaning more into its store label brands, which tend to be less expensive than its national labels.
But it's Walmart that serves as a barometer of spending given its outsized power in the retailing landscape. Walmart maintains that 90% of American households rely on the retailer for a range of products, and more than 150 million customers shop on its website or in its stores every week.
Walmart had said back in May that prices had started to increase in late April and got higher in May. But it said a bigger sting would start to be felt in June and July when the back-to-school shopping season went into high gear.
Analysts were expecting 73 cents per share on sales of $175.93 billion for the quarter, according to FactSet.
Per share results, excluding effects of charges related to certain legal matters and from business restructuring, was 68 cents.
Walmart's U.S. comparable sales — those from established physical stores and online channels — rose 4.6% in the latest quarter, slightly higher than the 4.5% gain in the fiscal first quarter. The business was fueled by groceries and health and wellness items, the company said.
Global e-commerce sales rose 25%, above the 22% growth in the fiscal first quarter.
The company said Thursday it expects earnings per share to be in the range of 58 cents to 60 cents for the current quarter. Analysts expect 57 cents per share, according to Factset.
Walmart also expects sales to be anywhere from 3.75% to 4.75% for the current period.
For the year, Walmart is raising is per share estimates to a range of $2.52 to $2.62, up from the previous estimate of a $2.50 to $2.60 range. Analysts are expecting $2.62 per share, according to FactSet.
Sales are anticipated to increase to 3.75% to 4.75% up from 3% to 4% growth it projected in May.