Walmart delivers strong Q2 results

Walmart Inc powered through an uncertain economic environment and tariff concerns and delivered solid second-quarter financial results that showed it keeps pulling in shoppers and outpacing peers like Target.

The nation’s largest retailer also on Thursday increased its annual profit and sales outlook.

The Bentonville, Arkansas-based company reported an increase of 4.6 per cent in comparable sales for the latest quarter — those coming from established stores and online channels. And executives noted that it is wooing consumers across all income cohorts, particularly higher-income shoppers, with its speedy deliveries, grocery discounts, and trendier fashion.

Walmart’s results marked a big difference from that of its rival Target, which reported on Wednesday another quarter of comparable sales declines. The Minneapolis-based discounter has been struggling to find its footing as its pinched shoppers defect to Walmart and other stores where they perceive better prices and merchandise. Target named a 20-year veteran to succeed its CEO Brian Cornell on February 1.

Walmart noted that its profitable e-commerce operations, its mix of items like clothing that carry high profit margin items, as well as advertising revenue have all given the retailer more flexibility in absorbing some of the higher costs from tariffs. Walmart’s CEO Doug McMillon also told investors on a call on Thursday that the impact of tariffs has been gradual enough that changes in spending behaviour have been muted.

But when the discounter does increase prices, lower-income and middle-income customers are trading down to lower-priced items or moving out of that merchandising category. And he said that as Walmart replenishes inventory at post-tariff price levels, Walmart will continue to see cost increases each week.

“We’re doing what we said we would do,” McMillon told analysts. “We’re keeping our prices as low as we can for as long as we can. Our merchants have been creative and acted with urgency to avoid what would have been additional pressure for our customers and members.”

A growing list of companies, including Procter & Gamble, E.lf. Cosmetics, Black & Decker and Ralph Lauren, told investors in recent weeks that they planned to or already had raised prices because of tariffs, though modestly.

On Tuesday, Home Depot, the nation’s largest home improvement retailer, reported improved sales during its latest quarter as consumers remained focused on smaller projects. Like Walmart, Home Depot’s performance missed Wall Street’s expectations.

But it is Walmart that serves as a barometer of spending, given its outsized power in American retailing. The company maintains that 90 per cent of American households rely on Walmart for a range of products, and more than 150 million customers shop on its website or in its stores every week.

Walmart said in May that prices had started to increase in late April and got higher in May. But it said on Thursday that it had introduced 7,400 price rollbacks, or temporary discounts, across the aisles in the latest quarter.

The company said it earned US$7.03 billion, or 88 cents per share, for the three-month period ending July 31. That compares with US$4.5 billion, or 56 cents per share, a year ago.

Sales rose nearly five per cent to US$177.4 billion.

AP