Walmart Continues Run of Sales Growth, Raises Forecasts--3rd Update

Walmart Inc. said sales rose in the second quarter and it raised its profit forecasts for the year, extending the retail giant's multiyear streak of growth as it takes market share from struggling competitors and expands online.

Sales at U.S. stores and websites operating at least 12 months grew 2.8%, due to some price increases, strong grocery sales and slightly more shoppers visiting stores and websites. U.S. e-commerce sales rose 37%, which includes a growing online grocery business.

"We're gaining market share. We're on track to exceed our original earnings expectations for the year," said Walmart CEO Doug McMillon Thursday in a release.

Walmart now expects U.S.comparable sales to rise at the upper end of a 2.5% to 3% range for the full year, an improvement from an earlier prediction of sales falling somewhere in that range.

Walmart shares rose more than 6% in premarket trading.

Walmart increased its profit target for the year, saying that full-year earnings per share will come in at a " slight decrease to slight increase" compared with last year. Last fiscal year Walmart reported adjusted earnings per share of $4.91. Previously, Walmart said earnings per share would decline this year.

The solid sales and earnings upgrade from Walmart contrasts with general nervousness in the stock market over the strength of the economy and weak sales at some other retailers. On Wednesday, Macy's Inc. lowered its full-year earnings outlook, saying sales during the quarter didn't meet expectations amid worries over tariff-related cost increases, sending its shares down 13%. And on Thursday J.C. Penney Co. reported a 9% drop in sales.

"Other results from the sector need to be viewed against this context: At present there is just no evidence of a material downturn," said Neil Saunders, managing director of GlobalData Retail. "Performance remains largely the responsibility of the strategies of individual retailers."

National data released Thursday eased concerns of a broader slowdown, with retail sales rising a seasonally adjusted 0.7% in July from a month earlier, well above economists' expectations, the Commerce Department said.

Several retailers including Target Corp., Home Depot Inc. and Lowe's Co. Inc. are scheduled to report earnings next week, providing a clearer picture of the broader health of the sector.

In recent years, Walmart has invested heavily to grow online and add more digital capability to stores such as services that allow shoppers to buy groceries online and pick up in store parking lots. It is also using more automation in stores to offset labor costs to spend elsewhere, such as faster online shipping and e-commerce tests such as Jetblack, a New York service that offers members paying $600 a year text-based buying and same-day shipping. U.S. stores are Walmart's primary sales and profit driver, while its U.S. e-commerce business remains unprofitable.

On Thursday, Mr. McMillon gave for the first time more details on the company's gun sales in the wake of a shooting at an El Paso, Texas, Walmart earlier this month that killed 22 and sparked new calls from some corporate employees and gun-control activists for the chain to stop selling firearms.

Walmart sells about 2% of the nation's firearms and 20% of the ammunition, said Mr. McMillon in a statement, "which we believe places us outside at least the top three sellers in the industry."

Mr. McMillon reiterated a previous statement that the nation's largest retailer and private employer is thinking through broader issues related to gun violence. "We will strive to use these experiences to identify additional actions we can take to strengthen our processes, improve our technology and create an even safer environment in our stores."

He said Walmart supports strengthening background checks for gun purchases and believes the reauthorization of the assault-weapons ban "should be debated to determine its effectiveness."

Write to Sarah Nassauer at sarah.nassauer@wsj.com

By Sarah Nassauer

Walmart Inc. said sales rose in the second quarter and it raised its profit forecasts for the year, extending the retail giant's multiyear streak of growth as it takes market share from struggling competitors and expands online.

Sales at U.S. stores and websites operating at least 12 months grew 2.8%, due to strong grocery sales, online and off, and slightly more shoppers visiting stores and websites. U.S. e-commerce sales rose 37%.

"We're gaining market share. We're on track to exceed our original earnings expectations for the year," said Walmart CEO Doug McMillon Thursday in a release.

Walmart now expects U.S.comparable sales to rise at the upper end of a 2.5% to 3% range for the full year, an improvement from an earlier prediction of sales falling somewhere in that range.

Walmart shares rose more than 5% in early trading.

Walmart increased its profit target for the year, saying that full-year earnings per share will come in at a " slight decrease to slight increase" compared with last year. Last fiscal year Walmart reported adjusted earnings per share of $4.91. Previously, Walmart said earnings per share would decline this year.

The solid sales and earnings upgrade from Walmart contrasts with general nervousness in the stock market over the strength of the economy and weak sales at some other retailers. On Wednesday, Macy's Inc. lowered its full-year earnings outlook, saying sales during the quarter didn't meet expectations amid worries over tariff-related cost increases, sending its shares down 13%. And on Thursday J.C. Penney Co. reported a 9% drop in sales.

"Other results from the sector need to be viewed against this context: At present there is just no evidence of a material downturn," said Neil Saunders, managing director of GlobalData Retail. "Performance remains largely the responsibility of the strategies of individual retailers."

National data released Thursday also eased concerns of a broader slowdown, with retail sales rising a seasonally adjusted 0.7% in July from a month earlier, well above economists' expectations, the Commerce Department said.

Several retailers including Target Corp., Home Depot Inc. and Lowe's Co. Inc. are scheduled to report earnings next week, providing a clearer picture of the broader health of the sector.

In recent years, Walmart has invested heavily to grow online and add more digital capability to stores such as services that allow shoppers to buy groceries online and pick up in store parking lots. It is also using more automation in stores to offset labor costs to spend elsewhere, such as faster online shipping and e-commerce tests such as Jetblack, a New York service that offers members paying $600 a year text-based buying and same-day shipping. U.S. stores are Walmart's primary sales and profit driver, while its U.S. e-commerce business remains unprofitable.

Retail chains have expressed concerns about the impact of the U.S.'s escalating trade war with China ahead of the holiday shopping season. On Tuesday, the Trump administration suspended plans to impose new tariffs on about $156 billion in goods from China until Dec. 15. The suspension affected tariffs planned on items including toys, cellphones and laptop computers that had been set to take effect Sept. 1. Tariffs on about $13.7 billion of fabrics and apparel were postponed until the end of the year, but tariffs will still move forward on about $39 billion of such items.

Walmart CFO Brett Biggs said Thursday Walmart has factored the suspension of tariffs into its full-year guidance, without breaking down details.

September tariffs will still hit "apparel and TVs, which are decent size categories for us," said Mr. Biggs in an interview. But the delay "makes it a little more manageable," he said.

Also on Thursday, Mr. McMillon gave for the first time more details on the company's gun sales in the wake of a shooting at an El Paso, Texas, Walmart earlier this month that killed 22 and sparked new calls from some corporate employees and gun-control activists for the chain to stop selling firearms.

Walmart sells about 2% of the nation's firearms and 20% of the ammunition, said Mr. McMillon in a statement, "which we believe places us outside at least the top three sellers in the industry."

Mr. McMillon reiterated a previous statement that the nation's largest retailer and private employer is thinking through broader issues related to gun violence. "We will strive to use these experiences to identify additional actions we can take to strengthen our processes, improve our technology and create an even safer environment in our stores."

He said Walmart supports strengthening background checks for gun purchases and believes the reauthorization of the assault-weapons ban "should be debated to determine its effectiveness."

Write to Sarah Nassauer at sarah.nassauer@wsj.com


  (END) Dow Jones Newswires
  08-15-19 0908ET
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