What happened
Shares of Walmart Inc. (WMT +0.82%) are moving higher today after the company turned in an all-around stellar second-quarter earnings report. The retailer posted its best comparable-sales growth in more than a decade and raised earnings guidance, as the company is executing across the board and riding strong growth in the industry. As of 2:47 p.m. EDT, the stock was up 9.7%.
So what
Comparable sales jumped 4.5% in the quarter, driven by growth in traffic, average transaction, and e-commerce. At Sam's Club, its membership-based club chain, same-store sales were up 5%, its fastest growth in six years, and comparable sales in its four biggest international markets were also positive. U.S. e-commerce growth, which was a pain point two quarters ago, was back up to 40%, keeping pace with guidance for the year.
Image source: Walmart.
Overall revenue was up 3.8% to $128 billion, exceeding analysts' consensus estimate of $126 billion. Though currency-neutral operating income fell from $6 billion to $5.7 billion, that was expected as the company invests in higher wages and e-commerce, with its number of grocery pickup locations now reaching 1,800.
CEO Doug McMillon said, "We're pleased with how customers are responding to the way we're leveraging stores and e-commerce to make shopping faster and more convenient. We're continuing to aggressively roll out grocery pickup and delivery in the U.S., and we recently announced expanded omni-channel initiatives in China and Mexico."
Now what
On top of the strong quarter, Walmart said it would raise its earnings and comparable-sales guidance for the year. Management now sees comparable sales increasing 2%, up from a previous forecast of 1.5% to 2%, and expects adjusted EPS of $4.90 to $5.05, compared to prior guidance of $4.75 to $5.
Beyond the strong results, Walmart is making smart decisions by reorienting its international portfolio toward growth, as it did with its purchase of a majority stake in Flipkart.
Walmart is making all the right moves in an already strong retail environment. It's not surprising to see the stock surging today.
