Walmart, the world’s largest retailer, reported strong second-quarter earnings on Tuesday, beating analysts’ expectations and raising its full-year outlook. The company’s revenue grew 5.7% to $161.6 billion, while its operating income increased 6.7% to $7.4 billion. Walmart’s e-commerce sales rose 24% globally, led by its pickup and delivery services.
Walmart’s performance contrasted with that of its rival Target, which reported weaker-than-expected earnings last week. Target’s revenue fell 1.1% to $25 billion, while its operating income dropped 18.6% to $2.4 billion. Target’s online sales grew 8.9%, but its store traffic declined 2.9%.
Walmart Benefits from Diversified Business Model
One of the reasons why Walmart outperformed Target in the second quarter was its diversified business model, which includes grocery, general merchandise, health and wellness, and membership segments. Walmart’s grocery sales increased 6%, driven by strong demand for fresh food and consumables. Walmart’s general merchandise sales grew 9%, boosted by categories such as home, electronics, and sporting goods. Walmart’s health and wellness sales rose 7%, reflecting higher pharmacy volume and optical sales. Walmart’s membership segment, which includes Sam’s Club and Walmart+, saw its revenue increase 11%, fueled by higher membership income and comp sales.
Walmart also benefited from its international expansion, which accounted for $27 billion of its total revenue in the second quarter. Walmart’s international sales grew 11% in constant currency terms, with strong growth in markets such as Mexico, Canada, China, and India. Walmart’s international segment also improved its profitability, with operating income up 15% in constant currency terms.
Walmart Invests in Future Growth Opportunities
Another factor that contributed to Walmart’s success in the second quarter was its investment in future growth opportunities, such as e-commerce, omnichannel, and innovation. Walmart continued to enhance its online capabilities, adding more than 200 new pickup locations and expanding its delivery options to include express delivery and last-mile delivery. Walmart also integrated its online and offline channels, offering customers more convenience and flexibility. For example, Walmart launched a new service called Scan & Go in some of its stores, which allows customers to scan items with their smartphones and pay without going through a checkout lane.
Walmart also invested in innovation, launching new products and services that cater to changing customer needs and preferences. For example, Walmart introduced a new private label brand called Free Assembly, which offers fashion-forward clothing at affordable prices. Walmart also partnered with other companies to offer new services, such as telehealth with Ro and insurance with Clover Health.
Walmart Raises Full-Year Outlook
Based on its strong second-quarter results, Walmart raised its full-year outlook for fiscal year 2024. The company now expects its total revenue to grow 6% to 7% in constant currency terms, up from its previous guidance of 5% to 6%. The company also expects its operating income to grow faster than revenue in constant currency terms, up from its previous guidance of slightly faster than revenue. The company also expects its earnings per share to be in the range of $6.20 to $6.35, up from its previous range of $5.90 to $6.05.
Walmart’s CEO Doug McMillon said that the company is confident in its ability to deliver value for customers and shareholders in the long term. He said that Walmart is well-positioned to capitalize on the opportunities in the retail industry, which is undergoing rapid transformation due to digitalization, personalization, and social responsibility.
