Walmart tops profit expectations amid strong grocery demand

globalnews.ca:

Walmart Inc raised its full-year forecasts and beat second-quarter sales and profit estimates on Thursday, citing strong demand for its low-priced groceries and health and wellness products.

Shares in Walmart, which have climbed 12.3 per cent this year, were down slightly in morning trading.

“The earnings report from the world’s largest retailer certainly checked all the boxes,” said Art Hogan, chief market strategist at B Riley Wealth.

“The strong report also bodes well for the back-to-school and holiday shopping seasons,” he added.

Sales at Walmart’s U.S. stores open at least a year rose 6.4 per cent, excluding fuel, in the three months ended July 31, beating estimates of a 4.4 per cent increase, according to Refinitiv data.

Average transactions and the amount of items shoppers put in their carts also rose, the company said.

Walmart Chief Financial Officer John David Rainey told Reuters that shoppers are still “choiceful and discerning” and are focused on buying food and health and wellness products.

But there were green shoots. Easing inflation on general merchandise products, like apparel, opened wallets. And even though the category’s sales declined in the low single digits, it posted a much stronger performance than the prior quarter.

Shoppers also responded strongly to seasonal events, such as the Memorial Day and July 4 holidays as well as the back-to-school season, indicating that the consumer is not compromising and showing a willingness to spend, Rainey said.

These signs contributed to its decision to raise guidance, which estimates net sales growth for the year increasing four per cent to 4.5 per cent, from 3.5 per cent earlier.

“It is certain that they (consumers) are not suffering, but I am hesitant to say