Home Walmart Adapts to Demand, Beats Street Earnings Estimate
August 16, 2022
Walmart Adapts to Demand, Beats Street Earnings Estimate
Walmart Announces Partnership With Green Dot Bank

By Mike Duff

Contributing Editor

Walmart put up solid numbers in its second quarter after moves to cut costs and shift emphasis as consumer spending patterns changed under the influence of inflation.

Walmart net income was $5.15 billion, or $1.88 per diluted share, versus $4.28 billion, or $1.52 per diluted share, in the year-before quarter. Adjusted for one-time charges, earnings per share were $1.77 versus $1.78 in the year-previous period.

Walmart topped a Marketbeat-published analyst consensus adjusted earnings per share estimate of $1.60.

Comparable sales at Walmart U.S., without fuel, gained 6.5% with transactions up 1%, average ticket up 5.5% and e-commerce contribution about 100 basis points, the company reported. Comparable sales at Sam’s Club gained 9.5% with transactions up 9.8%, average ticket down 0.2% and e-commerce contribution of about 170 basis points.

Net sales were $151.38 billion while total revenues, including membership and other income, were $152.86 billion versus $139.87 billion and $141.05 billion, respectively, in the year-earlier quarter. Operating income was $6.85 billion versus $7.35 billion in the year-prior period. Operating income at Walmart U.S. was $5.7 billion versus $6.1 billion in the quarter a year previous. Operating income at Sam’s Club was $400 million versus $700 million in the period a year before.

In a webcast, Doug McMillon, Walmart president and CEO, said that the company had done better than expected and that a wider range of consumers, including more affluent shoppers than is typical, are patronizing Walmart under the influence of inflation. Walmart’s margins experienced pressure in the quarter as fuel cost weighed and consumers continued to prioritize food and consumable purchasing over general merchandise even as the retailer was discounting to move excess GM inventory. As it adjusts to the current economic environment, McMillon said that Walmart has been moving fewer containers through the supply chain as part of cost-cutting moves while investing in product categories where the company expects demand. At the same time, Walmart has been rolling out price reductions across a range of product categories with a focus on opening price point and private-label food and consumable items.

“We want to help families put meals on the table with Great Value and our other private brands to relieve the pressure they’re feeling,”
McMillon said.

McMillon added Walmart expects a strong back-to-school season finish then a rapid transition to fall and holiday merchandising and promotion, with newness and a strong position in opening price points. Mc Millon underscored the importance of the Walmart+ membership initiative, pointing to the addition of a free Paramount+ subscription as an additional benefit that will make signing up and remaining signed up more attractive. McMillion pointed out that Walmart is continuing to build on its omnichannel and service initiatives ranging from local delivery to advertising, as it pursues its established long-term strategy

In releasing the financial results, McMillon said. “We’re pleased to see more customers choosing Walmart during this inflationary period, and we’re working hard to support them as they prioritize their spending. The actions we’ve taken to improve inventory levels in the U.S., along with a heavier mix of sales in grocery put pressure on profit margin for Q2 and our outlook for the year. We made good progress throughout the quarter operationally to improve costs in our supply chain, and that work is ongoing. We continue to build on our strategy to expand our digital businesses, including the continued strength we see in our international markets.”

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