Earnings

Walmart Shares Up Across The Board On Big Earnings Beats

Walmart

It was a good day for Walmart on Wall Street.

The planet's largest retailer by sales crushed their way through Q2, with bigger than expected gains in revenue, earnings, same-store sales and eCommerce sales than analysts were predicting before the numbers hit the wires.

All-in revenue jumped up 3.8 percent to $128 billion, ahead of analyst forecasts of $125.9 billion. Earnings per share were $1.29 – again, ahead of the $1.22 Wall Street was expecting.

The headline number was the highly watched same-store sales figure. That picked up 4.5 percent – its strongest growth in a decade – nearly doubling analysts' predicted increase of 2.3 percent. Grocery, apparel and seasonal goods were the big drivers in that segment.

Also a highlight was eCommerce, with Walmart reporting 40 percent growth during the second quarter. In addition, the company raised its guidance, saying it now expects full-year net sales to rise 2 percent, U.S. comps to jump 3 percent and earnings of $4.90 to $5.05 a share, up from previous guidance of $4.75 to $5.

"Thanks to the hard work of our associates, we had a great quarter with strong results and momentum across the business," CEO Doug McMillon noted in a statement released concurrently with earnings. "We’re pleased with how customers are responding to the way we're leveraging stores and eCommerce 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 omnichannel initiatives in China and Mexico. Customers have choices, and we're making it easier than ever for them to choose Walmart."

For all the positivity, however, there are analysts with lingering doubts. Neil Saunders, managing director of GlobalData Retail, told TheStreet that there were some numbers that cautious investors should be looking at more carefully.

"In terms of profit, this has been a quarter that Walmart would rather forget," Saunders said. "Operating income fell by 3.7 percent, a relatively weak outcome. At the net level, a $4.5 billion loss from the sale of 80 percent of Walmart Brazil pushed the company into the red by $861 million. Paradoxically, even if it looks bad, the net loss is forgivable, as it is related to essential restructuring as Walmart moves its attention away from peripheral parts of its business.

"However, the decline in operating profit is more concerning, as it reflects ongoing pressures from investing in lower prices, customer service, digital infrastructure and store refurbishments, as well as increased labor and transportation costs," he continued. "These pressures are unlikely to dissipate as the year progresses."

Concerns aside, investors were largely quite happy with what they saw – and what was forecast – as Walmart's stock price bounced up 10 percent when the market opened this morning.

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