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Walmart (WMT) Q2 Earnings & Sales Top Estimates, View Raised
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Walmart Inc. (WMT - Free Report) raised its guidance for fiscal 2024 on posting robust second-quarter results. During the quarter, both the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. Strong comp sales growth globally and a solid omnichannel model backed results.
Solid second-quarter results, confidence in the ongoing business momentum and a favorable customer response to its value plan encouraged this Zacks Rank #2 (Buy) company to pull up its guidance for fiscal 2024 yet again.
Quarter in Detail
Walmart’s adjusted earnings of $1.84 per share increased 4% from the year-ago period’s figure of $1.77. The metric surpassed the Zacks Consensus Estimate of $1.69.
Total revenues of $161.6 billion grew 5.7% and beat the consensus mark of $159.8 billion. The top line was positively impacted by currency movements to the tune of $0.6 billion. On a constant-currency (cc) basis, total revenues climbed 5.4%. The company witnessed growth in all segments.
E-commerce sales surged 24% globally on omnichannel strength, including pickup and delivery. E-commerce net sales formed 15% of WMT’s overall net sales. Walmart witnessed a solid increase in membership income.
The consolidated gross profit margin expanded 50 basis points (bps) to 24% as the company lapped the year-ago period’s higher markdowns and supply-chain costs. These were partly negated by category mix-related hurdles.
The adjusted operating income increased 8.1% to $7.4 billion. The adjusted EBITDA margin expanded 10 bps. Consolidated operating expenses as a percentage of sales increased by 33 bps year over year.
WMT’s global advertising business increased around 35%.
Walmart U.S.: The segment’s net sales grew 5.4% to $110.9 billion in the reported quarter. U.S. comp sales, excluding fuel, improved by 6.4% due to a 3.4% increase in the average ticket and transaction growth of 2.9%.
The segment experienced gains from grocery and health & wellness, partly offset by softness in general merchandise. The company continued to see a market share increase in grocery.
E-commerce boosted comps by 230 bps. E-commerce sales in the segment rose 24%, driven by strength in pickup & delivery and advertising. As of the second quarter, Walmart U.S. had nearly 4,600 pickup locations and more than 4,000 same-day delivery stores. The company remodeled 165 stores during the reported quarter.
The gross margin at Walmart U.S. rose 40 bps, while operating expenses deleveraged 28 bps. The operating income of the Walmart U.S. segment jumped 7.6% to $6.1 billion.
Walmart International: The segment’s net sales rose 13.3% to $27.6 billion. Currency movements had a $0.6-billion positive impact. On a cc basis, net sales jumped 11% to $27 billion. Sales were driven by Walmex, China and Flipkart. Segment e-commerce sales jumped 26% on store-fulfilled strength. The operating income, on a cc basis, grew 2.2% to $1.1 billion.
Sam’s Club U.S.: The segment, which comprises membership warehouse clubs, witnessed a net sales increase of 5.3% to $18.9 billion (excluding fuel). Sam’s Club’s comp sales, excluding fuel, grew 5.5%. While transactions grew 2.9%, the average ticket rose 2.5%. Comp sales saw strength across most categories, mainly led by food and consumables and healthcare.
The membership income climbed 7% in the quarter. The Plus penetration rate continued to rise. E-commerce fueled comps by 150 bps. E-commerce net sales jumped 18% at Sam’s Club U.S. on ro bust curbside performance. The segment’s operating income came in at $0.5 billion, up 22% year over year.
Other Financial Updates & Developments
Walmart ended the quarter with cash and cash equivalents of $13.9 billion and total debt of $50.4 billion.
In the first six months of fiscal 2024, WMT generated operating cash flow of $18.2 billion and free cash flow of $9 billion. In fiscal 2024, capital expenditures are likely to come between flat and slightly up compared with fiscal 2023.
Walmart repurchased eight million shares for $1.2 billion year to date. In the second quarter, it repurchased 3.2 million shares for $485 million. As of the second-quarter earnings release, the company had $18.2 billion remaining under its share buyback plan.
FY24 Guidance
For fiscal 2024, Walmart now expects consolidated net sales growth of 4-4.5% at cc compared with the previous view of nearly 3.5% growth.
Management expects the consolidated operating income to increase roughly 7-7.5% at cc now, including a 30-bps positive impact of LIFO. The consolidated operating income was earlier expected to increase 4-4.5% at cc, including the LIFO impact.
Management anticipates net interest expenses to escalate by approximately $500 million from the year-ago period. The effective tax rate is likely to be approximately 26.5%. The company also expects the noncontrolling interest to be a roughly 26-cent headwind to the EPS.
Management now envisions an adjusted EPS in the band of $6.36-$6.46, up from the earlier range of $6.10-$6.20. The bottom-line view includes an anticipated LIFO impact of 5 cents. WMT posted an adjusted EPS of $6.29 in fiscal 2023.
Q3 View
For the third quarter of fiscal 2024, Walmart expects consolidated net sales growth of around 3% at cc. The consolidated operating income is expected to rise about 1% at cc. The adjusted EPS is likely to come in the range of $1.45-$1.50.
Shares of WMT have risen 5.2% in the past three months compared with the industry’s growth of 4.5%.
Other Solid Picks
Here we have highlighted three other top-ranked stocks.
The Zacks Consensus Estimate for Kroger’s current financial-year EPS suggests an increase of 2.2% from the year-ago reported figure. Kroger has a trailing four-quarter negative earnings surprise of 7.8%, on average.
Ross Stores (ROST - Free Report) currently carries a Zacks Rank #2. This off-price retailer has an expected EPS growth rate of 11.3% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current financial-year EPS suggests growth of 13.5% from the year-ago reported figure. ROST has a trailing four-quarter negative earnings surprise of 11.5%, on average.
The TJX Companies (TJX - Free Report) has an expected EPS growth rate of 10.8% for three to five years. This off-price retailer holds a Zacks Rank #2 at present.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year EPS suggests growth of 15.4% from the year-ago reported figure. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.
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Walmart (WMT) Q2 Earnings & Sales Top Estimates, View Raised
Walmart Inc. (WMT - Free Report) raised its guidance for fiscal 2024 on posting robust second-quarter results. During the quarter, both the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. Strong comp sales growth globally and a solid omnichannel model backed results.
Solid second-quarter results, confidence in the ongoing business momentum and a favorable customer response to its value plan encouraged this Zacks Rank #2 (Buy) company to pull up its guidance for fiscal 2024 yet again.
Quarter in Detail
Walmart’s adjusted earnings of $1.84 per share increased 4% from the year-ago period’s figure of $1.77. The metric surpassed the Zacks Consensus Estimate of $1.69.
Total revenues of $161.6 billion grew 5.7% and beat the consensus mark of $159.8 billion. The top line was positively impacted by currency movements to the tune of $0.6 billion. On a constant-currency (cc) basis, total revenues climbed 5.4%. The company witnessed growth in all segments.
E-commerce sales surged 24% globally on omnichannel strength, including pickup and delivery. E-commerce net sales formed 15% of WMT’s overall net sales. Walmart witnessed a solid increase in membership income.
The consolidated gross profit margin expanded 50 basis points (bps) to 24% as the company lapped the year-ago period’s higher markdowns and supply-chain costs. These were partly negated by category mix-related hurdles.
The adjusted operating income increased 8.1% to $7.4 billion. The adjusted EBITDA margin expanded 10 bps. Consolidated operating expenses as a percentage of sales increased by 33 bps year over year.
WMT’s global advertising business increased around 35%.
Walmart Inc. Price, Consensus and EPS Surprise
Walmart Inc. price-consensus-eps-surprise-chart | Walmart Inc. Quote
Segment Details
Walmart U.S.: The segment’s net sales grew 5.4% to $110.9 billion in the reported quarter. U.S. comp sales, excluding fuel, improved by 6.4% due to a 3.4% increase in the average ticket and transaction growth of 2.9%.
The segment experienced gains from grocery and health & wellness, partly offset by softness in general merchandise. The company continued to see a market share increase in grocery.
E-commerce boosted comps by 230 bps. E-commerce sales in the segment rose 24%, driven by strength in pickup & delivery and advertising. As of the second quarter, Walmart U.S. had nearly 4,600 pickup locations and more than 4,000 same-day delivery stores. The company remodeled 165 stores during the reported quarter.
The gross margin at Walmart U.S. rose 40 bps, while operating expenses deleveraged 28 bps. The operating income of the Walmart U.S. segment jumped 7.6% to $6.1 billion.
Walmart International: The segment’s net sales rose 13.3% to $27.6 billion. Currency movements had a $0.6-billion positive impact. On a cc basis, net sales jumped 11% to $27 billion. Sales were driven by Walmex, China and Flipkart. Segment e-commerce sales jumped 26% on store-fulfilled strength. The operating income, on a cc basis, grew 2.2% to $1.1 billion.
Sam’s Club U.S.: The segment, which comprises membership warehouse clubs, witnessed a net sales increase of 5.3% to $18.9 billion (excluding fuel). Sam’s Club’s comp sales, excluding fuel, grew 5.5%. While transactions grew 2.9%, the average ticket rose 2.5%. Comp sales saw strength across most categories, mainly led by food and consumables and healthcare.
The membership income climbed 7% in the quarter. The Plus penetration rate continued to rise. E-commerce fueled comps by 150 bps. E-commerce net sales jumped 18% at Sam’s Club U.S. on ro bust curbside performance. The segment’s operating income came in at $0.5 billion, up 22% year over year.
Other Financial Updates & Developments
Walmart ended the quarter with cash and cash equivalents of $13.9 billion and total debt of $50.4 billion.
In the first six months of fiscal 2024, WMT generated operating cash flow of $18.2 billion and free cash flow of $9 billion. In fiscal 2024, capital expenditures are likely to come between flat and slightly up compared with fiscal 2023.
Walmart repurchased eight million shares for $1.2 billion year to date. In the second quarter, it repurchased 3.2 million shares for $485 million. As of the second-quarter earnings release, the company had $18.2 billion remaining under its share buyback plan.
FY24 Guidance
For fiscal 2024, Walmart now expects consolidated net sales growth of 4-4.5% at cc compared with the previous view of nearly 3.5% growth.
Management expects the consolidated operating income to increase roughly 7-7.5% at cc now, including a 30-bps positive impact of LIFO. The consolidated operating income was earlier expected to increase 4-4.5% at cc, including the LIFO impact.
Management anticipates net interest expenses to escalate by approximately $500 million from the year-ago period. The effective tax rate is likely to be approximately 26.5%. The company also expects the noncontrolling interest to be a roughly 26-cent headwind to the EPS.
Management now envisions an adjusted EPS in the band of $6.36-$6.46, up from the earlier range of $6.10-$6.20. The bottom-line view includes an anticipated LIFO impact of 5 cents. WMT posted an adjusted EPS of $6.29 in fiscal 2023.
Q3 View
For the third quarter of fiscal 2024, Walmart expects consolidated net sales growth of around 3% at cc. The consolidated operating income is expected to rise about 1% at cc. The adjusted EPS is likely to come in the range of $1.45-$1.50.
Shares of WMT have risen 5.2% in the past three months compared with the industry’s growth of 4.5%.
Other Solid Picks
Here we have highlighted three other top-ranked stocks.
Kroger (KR - Free Report) , a renowned grocery retailer, currently carries a Zacks Rank #2. KR has an EPS growth rate of 5.8% for three to five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Kroger’s current financial-year EPS suggests an increase of 2.2% from the year-ago reported figure. Kroger has a trailing four-quarter negative earnings surprise of 7.8%, on average.
Ross Stores (ROST - Free Report) currently carries a Zacks Rank #2. This off-price retailer has an expected EPS growth rate of 11.3% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current financial-year EPS suggests growth of 13.5% from the year-ago reported figure. ROST has a trailing four-quarter negative earnings surprise of 11.5%, on average.
The TJX Companies (TJX - Free Report) has an expected EPS growth rate of 10.8% for three to five years. This off-price retailer holds a Zacks Rank #2 at present.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year EPS suggests growth of 15.4% from the year-ago reported figure. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.