Wal-Mart Stores (NYSE:WMT) reported fiscal 2018 second-quarter results on Aug. 17. The retail colossus continues to enjoy strong growth in its e-commerce operations and improving performance in its stores, prompting management to raise its earnings guidance for the year ahead.

Wal-Mart Stores results: The raw numbers


Q2 2018

Q2 2017

Year-Over-Year Change


$123.355 billion

$120.854 billion


Operating Income

$5.969 billion

$6.165 billion


Adjusted EPS




Data source: Wal-Mart Stores Q2 2018 earnings press release. (Opens PDF)

What happened with Wal-Mart Stores this quarter?

Total revenue grew 2.1% to $123.4 billion, and 2.9% on a constant currency basis. U.S. comparable-store sales -- excluding the impact of fuel prices -- rose 1.8%, fueled by a 1.3% increase in traffic. Additionally, nine of Wal-Mart's 11 international markets enjoyed positive comp sales, helping Walmart International's net sales rise 1% (2.5% in constant currency), to $28.3 billion.

Wal-Mart's U.S. e-commerce business continued its torrid growth, with sales surging 60%, following a 63% jump in the first quarter. Gross merchandise volume soared 67%, as Wal-Mart expanded its online assortment of goods to more than 67 million products. Notably, e-commerce growth was primarily driven by higher organic sales through Walmart.com, which were further boosted by recent e-commerce acquisitions such as Bonobos.

A mobile phone floating above a man's hand with a small model shopping cart resting on it.

Wal-Mart has become a powerful force in online retail. Image source: Getty Images.

"Our customers are responding to the improvements in stores and online, and our results reflect this," said CEO Doug McMillon in a press release. "We are moving faster and becoming more creative as we strive to make every day easier for busy families."

However, Wal-Mart's technology investments and its move to lower prices at many of its stores in order to drive sales weighed on profits. Gross margin fell 11 basis points, and operating income declined 3.2% (1.6% in constant currency), to $6 billion.

Fortunately, Wal-Mart continues to gush cash, to the tune of more than $11 billion in operating cash flow and nearly $7 billion in free cash so far in fiscal year 2018. In turn, the retail behemoth was able to return $3.8 billion to shareholders via dividends and stock buybacks in the second quarter.

Looking forward

Wal-Mart expects third-quarter comp sales growth (ex. fuel) of 1.5% to 2% for its U.S. locations and 1% to 1.5% for its Sam's Club stores. Earnings per share are projected to be between $0.90 and $0.98.

The company also boosted its fiscal 2018 full-year adjusted EPS guidance to $4.30 to $4.40, up from a previous forecast of $4.20 to $4.40.

"We're uniquely positioned to deliver the seamless, fast, innovative and exciting shopping experience our customers desire," McMillon said during Wal-Mart's earnings call. "We have a clear strategy that we're executing against and good momentum across the business."

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