ii view: Walmart’s sales and guidance disappoint

Second-quarter results to 30 June  

• Currency adjusted revenue up 5.1% to $187.9 billion (£139 billion)
• Adjusted Earnings Per Share (EPS) up 19% to $0.81 per share

Guidance:

• Now expects full-year net sales growth of between 4% to 5%, up from a previous 3.5% to 4.5%
• Now expects full-year adjusted earnings of between $2.80 to $2.87 per share, up from a previous $2.75 to $2.85

Chief executive John Furner said: “Our team delivered another good quarter, and we continue to make steady progress on the long-term value drivers of our business.

“Our multi-year growth in e-commerce is evidence that customers are choosing Walmart because we deliver price, speed, and convenience across a broad assortment. At Walmart, they can have it all.”

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ii round-up:

Retailing mammoth Walmart Inc (NASDAQ:WMT) today upped full-year sales and profit hopes although with the raised profit prediction falling shy of existing Wall Street hopes.

Second-quarter US comparable sales up 2.6% helped push overall revenues of $187.9 billion (£139 billion), fuelling earnings growth of 19% to $0.81 per share. Analysts had expected US comparable sales up 3.5%.

The relatively new CEO now expects full-year net sales growth of between 4% to 5%, up from a previous 3.5% to 4.5%, and fuelling adjusted earnings of between $2.80 to $2.87 per share. Wall Street had predicted earnings of $2.90 per share.

Shares in the Dow Jones 30 company fell 8% in post-results US trading having come into these latest numbers up by around a tenth over the last year. Shares in Tesco (LSE:TSCO) are up around 5% over that time, while the Dow index has gained by close to a fifth.

Walmart operates more than 10,700 stores and numerous websites in 19 countries. Former US divisional head Furner took over from Doug McMillon, who was CEO for 10 years, in February.

Sales for the core US Walmart business rose 3.5% to $125.2 billion, hindered by reduced drug prices under US President Donald Trump’s initiatives.

Revenues for the group’s ‘Sam’s Club’ banner outlets climbed 8.8% to $25.7 billion, while overseas sales improved 12.8% to $35.2 billion. Membership income accounted for the balance.

Third-quarter results are scheduled for 19 November.  

ii view:

Began in 1962, the retailer today employs around 2.1 million people and sells products ranging from food and drink to clothes, toys and furniture. Each week, around 280 million customers and members visit its stores and e-commerce websites. Geographically, the US made most sales in 2025 at just over four-fifths, with overseas ops the balance.

For investors, Trump initiatives to reduce drug prices have hindered US-related revenues. Trump trade tariff uncertainty continues for many items such as toys imported from China. Now, elevated energy prices given the ongoing conflict in the Middle East cast a shadow over inflation, interest rates, and therefore potential future consumer demand, while an estimated future price/earnings (PE) ratio above the three and 10-year averages may suggest the shares are not obviously cheap.

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More favourably, full-year sales and earnings forecasts have been raised, even if they are below Wall Street hopes. Sales for the e-commerce business continue to progress, with those for US Walmart up 24% during this latest quarter. There’s diversity across products and geographical markets, while the dividend has grown consecutively for more than 50 years, leaving the shares sat on a forecast future yield of close to 1%.

In all, and despite ongoing risks, this retailing mammoth continues to justify its place in many already diversified investor portfolios.

Positives:

• Ongoing share buybacks
• Focus on customer value

Negatives:

• Uncertain economic outlook
• Subject to currency moves

The average rating of stock market analysts:

Buy