Walmart reported better-than-expected second-quarter results and raised its forecast for fiscal 2025.
Walmart (WMT 6.58%)the retail giant known for its vast store network and e-commerce presence announced its second quarter of fiscal 2025 results on August 15, 2024. The company reported positive financial results, with key metrics beating management’s expectations. Walmart reported adjusted earnings per share of $0.67, beating the high end of its guidance range of $0.62 to $0.65. Consolidated net sales increased 4.8% to $169.3 billion, at the high end of the 3.5% to 4.5% guidance range. In addition, operating income increased 8.5%, beating the forecast increase of 3.0% to 4.5%.
| Metric | Result of the current period | Management assessment | Previous year’s result | Percent change |
|---|---|---|---|---|
| Consolidated net sales | 169.3 billion US dollars | 165.8 billion US dollars | 162.5 billion US dollars | 4.8% |
| Operating result | 7.940 billion US dollars | 7.628 billion US dollars | 7.316 billion US dollars | 8.5% |
| Adjusted earnings per share | $0.67 | $0.62 to $0.65 | 0.61 USD | 9.8% |
| Stock levels | 55.6 billion US dollars | – | 56.7 billion US dollars | -2.0% |
Source: Expectations based on management guidance as set out in the earnings report dated May 16, 2024.
Understanding Walmart
Walmart is a global retail heavyweight, operating thousands of stores and major e-commerce platforms worldwide. It aims to seamlessly integrate physical and digital shopping experiences. The company has recently focused on enhancing its omnichannel strategy, low-price leadership, investing in technology and automation, and expanding its global presence.
The omnichannel strategy includes services such as in-store pickup, delivery and advanced inventory management. Investments in supply chain automation aim to reduce costs and improve efficiency. Walmart’s global presence, particularly in markets such as India through its digital payments platform PhonePe, is instrumental in diversifying revenue streams.
Quarterly Highlights
During the quarter, Walmart reported a consolidated net sales increase of 4.8% to $169.3 billion. This growth was driven by strong performances across several segments. For example, global e-commerce sales increased 21%, primarily due to initiatives such as in-store pickup and delivery services.
Operating profit increased 8.5% to $7.940 billion, exceeding management’s forecast of 3.0% to 4.5% growth.
However, the company reported a decline in free cash flow, which decreased by $3.1 billion year-over-year. The decrease was primarily due to higher investments in technology advancements and supply chain improvements. Inventory levels also decreased by 2.0%, consistent with effective inventory management strategies.
Of particular note, Walmart’s international operations showed robust growth, with net sales up 7.1% (8.3% at constant currency). Sam’s Club also reported 14.4% growth in membership revenue, reaching a new high in total membership.
outlook
Walmart has updated its guidance for the third quarter and full fiscal year 2025. For the coming quarter, the company expects operating income to increase between 3.0% and 4.5%, with net sales growth forecast to be between 3.25% and 4.25%. In addition, for full fiscal year 2025, net sales are expected to grow between 3.75% and 4.75% and adjusted operating income is expected to grow between 6.5% and 8.0% in constant currencies.
Management’s future prospects are strengthened by its investments in technology and omnichannel initiatives.
Investors should keep an eye on Walmart’s ability to manage rising costs and competitive pressures throughout the remainder of the fiscal year. The company’s updated guidance reflects confidence in maintaining positive trends through ongoing operational improvements and strategic investments.
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