 "Walmart raises annual profit forecast on steady demand, shares jump")
US retailer Walmart raised its sales and profit forecasts on Thursday for a second time this year, as Americans kept flocking to its stores for inexpensive essentials, sending its shares up more than 6 per cent in premarket trading.
The world's largest retailer by sales is among the first major US chains to report quarterly results that provide insight into how consumers are feeling, particularly after the government reported an unexpected deterioration in the labor market, raising fears of a recession.
Walmart's results suggest that despite several years of above-average inflation, consumer spending remains resilient.
Inflation is now moderating, with US consumer prices down in July, according to the US Labor Department.
Walmart said its second-quarter sales were bolstered by strong demand for fresh food, particularly produce and high-quality meats. Customers also increased spending on personal care and beauty products, and when it came to health and wellness, they favored branded drugs over generics.
The company noted that higher-income customers, especially those earning over $100,000 annually, significantly contributed to sales of home furniture, appliances, clothing, and toys, leading to broad market-share gains in these categories.
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These affluent shoppers have been drawn to Walmart's $98-per-year Walmart Plus subscription, which offers benefits such as unlimited free deliveries, curbside pickup, a Paramount+ streaming subscription, and a discount of 10 cents per gallon at its fuel stations.
The retailer reported a 16 per cent increase in membership and other income during the quarter, which contributed to a 22 per cent rise in US online sales. Online sales were driven largely by a 50 per cent rise in store-fulfilled deliveries, Walmart said.
"The US consumer seems to be in a stable position relative to the start of this year, which is encouraging given concerns of a looming slowdown," CFRA Research analyst Arun Sundaram said.
Walmart's heft in grocery has largely shielded it from some broader economic pressures. The company has also strategically invested in store and merchandise upgrades, as well as services such as curbside pickup and delivery, allowing it to capture market share from competitors including Target.
"Walmart's significant investments in pricing, store quality, technology, and supply chain have enabled the company to continue gaining market share, likely offsetting what we perceive as a slower-spending environment," said Scot Ciccarelli, an analyst at Truist Securities.
Target, whose shares were up 3 per cent in premarket trade, reports its quarterly results next Wednesday.
Walmart forecast annual adjusted profit per share to be between $2.35 and $2.43, compared with its prior expectations to potentially better or be at the high end of a range of $2.23 to $2.37 per share.
Fiscal 2025 consolidated net sales is now forecast to grow in the range of 3.75 per cent to 4.75 per cent from a prior range of 3 per cent to 4 per cent growth.
The company posted second-quarter earnings of 67 cents per share, beating analysts' expectations for 65 cents, according to LSEG. Its overall revenue rose 4.8 per cent to $169.3 billion, beating Wall Street forecasts of $168.53 billion.
Walmart shares were up 6.4 per cent at $73.07 in premarket trading and were on track to open at a record high. The blue-chip stock has climbed 30.7 per cent so far in 2024, outperforming the S&P 500's 14.4 per cent rise.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)