Walmart Q2 Earning Report: The Retailer's Results Surpassed Analysts' Expectations

Walmart on Tuesday said sales grew 📈 more than 8%, but profits tightened in the fiscal Q2, as consumers turned to the discounter for groceries and essentials. It was a pleasant surprise because the profit far exceeded analysts’ forecasts. Immediately after the release of the Q2 2022 earnings report, shares of the company rose about 5% to close the day at $139.37 💰

Here’s what Walmart reported for its second quarter 👇

• Earnings per share (EPS): $1.77 adjusted vs. $1.62 expected
• Revenue: $152.86 billion reported vs. $150.81 billion expected

Walmart topped analysts’ expectations for earnings and revenue in the 2Q

Walmart reported mixed results for Q2 FY 2023, ended 📅 July 31, 2022. The company’s adjusted earnings per share (EPS) beat consensus estimates, falling marginally year-over-year (YOY). Adjusted EPS was positively affected by an insurance settlement for Walmart Chile and a dividend related to the company’s investment in JD Inc. Walmart’s revenue also came in above analyst forecasts, rising 📈 8.4% YOY.

Comparable store sales growth for the company’s U.S.-based stores and clubs also beat analyst estimates.

Walmart Chief Financial Officer (CFO) John David Rainey said that inflation was partly fueling sales growth, including among middle- and high-income shoppers attracted to Walmart for its reputation as a discount retailer.

In addition, the giant retailer had a significant increase in comparable sales 🛍 (more than 7% year-over-year).

Comparable sales growth gauges a company’s ability to generate additional revenue from established stores. If the bulk of a company’s sales is being generated by established stores as opposed to new ones, this is a good sign that the company’s products have not yet saturated the local market 🛒

What Walmart predicts for the next quarter

Walmart said it expects adjusted EPS to decline by 9.0 to 11.0% YOY for Q3 FY 2023. U.S. comparable sales excluding fuel are expected to grow by about 3.0%.

The company said it maintained its prior outlook for H2 FY 2023, including 3.0% YOY growth for U.S. comparable sales growth for that period as well.

What to expect from Walmart shareholders

Walmart daily stock chart, August 18, 2022.

Inflation and shrinking 🇺🇸 U.S. household incomes are encouraging shoppers to shop more with discounts, and to stock up now before possible price increases. Walmart has been virtually unaffected by consumer inflation because the retailer offers customers low retail prices. Because of this, many customers of more premium retailers are switching to Walmart to make inventory.

📌 Based on the company’s current outlook for the next quarter, we can expect further positive investor reaction to the giant’s performance.

Summary

• Walmart topped analysts’ expectations for earnings and revenue in the fiscal second quarter.
• The company said it maintained its prior outlook for H2 FY 2023, including 3.0% YOY growth for U.S. comparable sales growth for that period as well.
• Immediately after the release of the Q2 2022 earnings report, shares of the company rose about 5% to close the day at $139.37.