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Diving certificate:
- Walmart’s comparable store sales in the US excluding fuel increased by 4.2% in the second quarter of fiscal year 2025 as the retailer saw an increase in the number of transactions and unit volumes online and in-store.
- Walmart’s U.S. business saw mid-single-digit growth in grocery, led by fresh food, and a 22% increase in e-commerce sales.
- Delivery and pickup sales grew faster than in-store or club sales, Walmart President and CEO Doug McMillon told investors in a quarterly earnings call Thursday morning.
Diving insight:
Grocery continues to drive Walmart’s growth as price-conscious shoppers turn to the retailer to stock their refrigerators and pantries. In the second quarter, the company’s sales in the grocery and health and wellness categories outperformed sales in the general merchandise category.
“The food sector continues to enjoy strong popularity and it is encouraging to see improvements in the general merchandise sector,” McMillon told investors.
In the U.S., overall retail prices were slightly deflationary, while food prices were slightly inflated at the end of the second quarter but fell 30 basis points from the previous quarter, McMillon said.
“In the context of a grocery sector where inflation is easing and customer switching gains are weakening, this is a solid performance that demonstrates Walmart’s superior execution,” Neil Saunders, managing director of GlobalData’s retail division, wrote in an emailed comment.
Walmart’s second quarter marked a recovery in sales growth
Change in retailer sales in the US compared to last year (excluding fuel)
On e-commerce, Walmart is leveraging its massive store fleet to fulfill orders, expanding its automation capabilities and using generative AI to fuel online sales growth, executives said. The proximity of stores to customers enables faster delivery times. Deliveries through stores rose about 50% in the second quarter, with many customers choosing faster speeds such as delivery in under an hour or three hours, Walmart Chief Financial Officer John David Rainey told investors.
More than 45 percent of Walmart’s U.S. e-commerce fulfillment center volume is now automated, and about 1,800 stores receive freight from 15 regional distribution centers in various stages of automation implementation, allowing supply chain teams to process more units, Rainey said.
McMillon said Walmart’s wide range of items and services, low prices and pleasant shopping experience have increased sales.
“Value is important to everyone, whether you make over or under $100,000,” McMillon said. “We see behavioral differences at lower income levels – more focus on entry-level price points. … And as for higher income people, they can buy more non-essentials and pay more for convenience.”
The retailer continues to gain market share across all income groups, including high-income households, executives told investors.
“I think the Walmart+ membership, the delivery, the things we’re doing with remodeling – all of those things come together to give us the opportunity to continue to grow and have higher income levels regardless of what’s happening in the economy,” McMillon said.
While there is debate about how well Walmart can retain its higher-income customers as inflation subsides, GlobalData is optimistic that this customer group will stick around, Saunders wrote.
“Very few higher-income consumers shop at Walmart with gritted teeth. Of course there will be some customer churn, but that is the norm in grocery and something Walmart can handle,” Saunders wrote, adding that the retailer’s improvements in grocery, including more innovative DTC brands and the new private label Bettergoods, will play a role in customer retention.
