Company raises its full-year earnings guidance
Walmart raised its guidance for the full year. The company now expects to earn between $4.15 per share and $4.35 a share, up from the earlier forecast of $4.00 a share to $4.30 a share.
“We’re pleased with the positive momentum in our business,” Walmart chairman and chief executive officer Doug McMillon said in a statement. “Our strategy in the United States is working, as we delivered an eighth consecutive quarter of positive [comparable sales], and international also performed well.”
Same-store sales at its U.S. division increased 1.6% following a 1% gain in the first quarter. It was the division’s biggest same-sales gain since the quarter ended July 2012, when comps grew 2.2%.
Nine of 11 international markets recorded comparable-store sales increases in the period. Markets where comps declined were China, down 0.5%, and the United Kingdom, where Walmart competes with deep-discount grocers Aldi and Lidl. Excluding fuel, same-store sales at its U.K. stores declined 7.5% in the second quarter.
Online sales increased 11.8% from the preceding quarter but were down from 16% in the same period a year ago. The company cited progress in its online grocery service, which allows shoppers to order online and pick up the merchandise at a store. Walmart said it added online grocery to 30 new markets in the second quarter, for a total of about 60 markets and 400 locations.
The company also said it is benefitting from the expansion of the footprint of its smaller Neighborhood Market outlets. Same-store sales at such stores increased 6.5% in the second quarter, the company said.
General merchandise, including clothing and health and wellness, was also among top-performing categories, the company said.
Investments in fresh food are paying off, the company said. The grocery business recorded positive comps and an increase in foot traffic during the period, bolstering the performance of the category despite deflationary pressures.
Walmart also said its ongoing investments have led to more merchandise being in stock and to more appealing stores. These investments, which include high-profile spending on wage increases and employee training, are expected to lower profitability by 30 cents a share for the full year.
In the current quarter, Walmart expects to earn between 90 cents and $1 a share, with comparable-store sales in its U.S. division rising between 1% and 1.5%.