At a time when many of its peers are struggling, Walmart (WMT) posted better than expected quarterly results on Thursday, thanks to stronger sales and more customers, and raised its guidance for the full year.
The world’s biggest retailer reported revenue of $ 120.9 billion in the second quarter, surpassing analysts’ projection of $ 119.3 billion, and a 0.5% uptick over that three month period last year. And net income jumped 8.6%, to $ 3.8 billion from $ 3.5 billion in the comparable quarter.
Sales at stores open at least a year, a key financial measurement for retailers, were also up 1.6%, the eighth quarter in a row of growth.
Walmart's results came the day after its retail rival Target reported decreased sales, a 9.7% plunge in earnings, and said it was reducing its sales estimate for the remainder of the year.
The world’s largest retailer appeared to take the financial results as proof that its decision to key in on its online business, including the $ 3 billion purchase of e-commerce site Jet.com announced last week, was the right path forward. It boosted its full year guidance to between $ 4.15 and $ 4.35 per share, as compared to its previous forecast which fell between $ 4.00 and $ 4.30.
“We remain focused on building e-commerce capabilities globally,” Doug McMillon, president and CEO of Walmart Stores Inc. said in a statement. “Walmart is uniquely positioned to provide customers with a seamless shopping experience where we save them time and money.”
Earnings of $ 1.21 per share blew past estimates of $ 1.02, according to S&P Global Market Intelligence.
As to why its sales increased when so many of its competitors faltered in the last quarter, Walmart U.S. President and CEO Greg Foran says that it's the cumulative result of numerous factors, from improved grocery options, to tidier stores, to better customer service and discounted prices.
"It's not one thing,'' Foran said in a call with reporters Thursday. "What happens, as all these things come together, you gradually start to do a little better.''
In the midst of a rapidly changing retail landscape, the retailer has been making aggressive moves to bolster its online business and super centers. It's filling store aisles with attractive displays of organic fruits, gourmet cheeses and other fresh products to snatch shoppers who'd more typically head to grocery chains like Wegman's, Safeway or Whole Foods for such goods.
At the start of this year, Walmart shuttered dozens of low-performing stores, and last week the retailer announced that it would be buying Jet.com, a move designed to help the company become as big a player in online shopping as it is in brick and mortar retail.
The shift to more organic food options, as well as its ShippingPass offering, which offers two-day shipping for a membership fee and is similar to Amazon Prime, has given the giant retailer an edge over many of its peers. However, "it's still lagging behind growth of some of the e-commerce only competitors,'' says Natalie Kotlyar, partner in the consumer business practice of international accounting firm BDO.
Given Walmart’s mammoth size, significant growth spurts will be difficult, Kotlyar says. But the company’s acquisition of Jet.com and recent partnership with Chinese e-commerce giant JD.com will help it to progress. “The best way to grow is through acquisition,” Kotlyar says.
Online sales have made up a tiny portion of Walmart's overall revenue, adding up to $ 13.6 billion out of $ 482 billion in 2015. Yet, Walmart has the second-most trafficked retail website in the U.S. after Amazon. And WalMart may be able to pick up some new shoppers, since Jet.com’s customer base tends to be wealthier.
“We're continuing to ensure that we make decisions that allow us to focus on the right businesses to win long term,” Walmart Chief Financial Officer Brett Biggs said in Thursday’s media call.
The retailer has also taken steps to improve its workplace culture, boosting wages and upgrading stores,.
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