Walmart reported better-than-expected second-quarter sales on Thursday as customers continued to flock to the world’s largest retailer.
The retailer also raised its profit forecast and now expects adjusted consolidated operating profit to rise between 6.5 and 8 percent. It had previously expected an increase of 4 to 6 percent.
Shares rose nearly 7.5 percent in premarket trading, adding to a nearly 30 percent increase since the beginning of the year.
Walmart reported a 4.7% increase in net sales to $167.8 billion in the quarter and a similar increase in total sales to $169.3 billion on Thursday. These figures include sales from Walmart US and its international operations as well as those of the Sam’s Club warehouse chain.
Comparable sales, however, have grown more slowly. In the quarter ended July 31, comparable sales at Walmart US (excluding fuel) rose 4.2 percent compared to the same period last year. In the same period last year, comparable sales rose 6.4 percent.
The decline is due to a slowdown in average ticket growth, which increased by just 0.6% in the quarter compared to the same period last year.
Operating profit increased $500 million year-on-year to $6.6 billion.
Nevertheless, Walmart US reported an increase in comparable sales compared to the previous two quarters (end of April and end of January), when year-over-year sales were 3.8% and 4.0%, respectively.
At Walmart US, the number of higher-income customers increased and e-commerce sales also rose by 17 percent, it said.
“Although Walmart’s overall growth has slowed somewhat since last quarter, today’s numbers show that the company still has enough fuel in the tank to give the business a significant boost,” Neil Saunders, managing director of GlobalData, wrote in a statement.
Analysts at Jefferies called Walmart’s results “strong” in a note, beating analysts’ expectations for comparable sales at Walmart US and Sam’s Club, as well as gross margin and operating profit.
“In the context of a grocery sector where inflation is easing and profits from customer switching are weakening, this is a solid performance that demonstrates Walmart’s superior execution,” Saunders wrote.
“More broadly, the good results will be a relief for the entire retail sector, as poor sales at Walmart would be a bad omen for the rest of the industry.”
