In the second quarter, Walmart missed a Wall Street earnings estimate but beat on revenues as the company continued to work on minimizing price increases arising from tariff-related costs that will become a bigger factor in the second half of the year as duties weigh more on arriving inventory.
Walmart net income was $7.03 billion, or 88 cents per diluted share, versus $4.5 billion, or 56 cents per diluted share, in the year-earlier quarter. Adjusted for one-time events, diluted earnings per share were 68 cents versus 67 cents in the year-prior period, the company reported.
For the quarter, a Zacks Investment Research analyst consensus estimate called for earnings per adjusted diluted share of 73 cents and revenue of $175.51 billion. The company said that general liability and workers’ compensation claims came in higher than expected and impacted second-quarter profits.
Comparable sales gained $4.8% excluding the impact of fuel price volatility.
Net sales were $175.75 billion and total revenues were $177.4 billion versus $167.77 billion and $169.34 billion, respectively, in the year-previous quarter.
Operating income was $7.29 billion versus $7.94 billion in the year-before period, while adjusted operating income was $7.88 billion versus $7.94 billion.
Comps at Walmart U.S. gained 4.6% year over year in the quarter, while those at Sam’s Club advanced $5.9%, both sans fuel.
Net sales at Walmart U.S. were $120.91 billion while operating income was $6.72 billion versus $115.35 billion and $6.59 billion, respectively, in the year-past quarter. Net sales at Sam’s Club were $23.64 billion, while operating income was $489 million versus $22.85 billion and $581 million, respectively, in the year-past period. Sam’s Club posted an operating income adjustment in the latest second quarter, making the metric $569 million.
Walmart stated that e-commerce sales at both its U.S. division and Sam’s Club increased by 26% in the quarter year over year.
Walmart raised its fiscal year guidance for net sales to an increase of 3.75% to 4.75% from 3% to 4% and adjusted EPS to $2.52 to $2.62 from $2.50 to $2.60.
Regarding tariffs and prices, Doug McMillon, Walmart president and CEO, said, “We’re doing what we said we would do. We’re keeping our prices as low as we can as long as we can. Our merchants have been creative and acted with urgency to avoid what would have been additional pressure for our customers and members.”
The company has generated rollbacks to help offset cost-based price increases. Up to the second quarter, McMillon said that tariff-related price impacts had been gradual enough not to affect shopper behavior dramatically, but some shifts are evident.
“But as we replenish inventories at post-tariff price levels, we’ve continued to see our costs increase each week, which we expect to continue into the third and fourth quarters. Not surprisingly, we see more adjustments in middle- and lower-income households than we do with higher-income households, and in discretionary categories where item prices have gone up, we see a corresponding moderation in units at the item level as customers switch to other items or in some cases, categories.”
McMillon said that the company was happy with its back-to-school season, which he characterized as usually indicative of how the fall and winter holidays will play out, with units, dollars sold and inventory sell-through.
“We’re expecting to have a good holiday season at Walmart,” he said.
In the conference call, John David Rainey, Walmart executive vice president and CFO, said general merchandise comps gained in both namesake and Sam’s Club stores.
McMillon, in announcing the financial results, said, “The top-line momentum we have in our business comes from how we’re innovating and executing. Connecting with our customers and members through digital experiences is helping to drive our business, and the way we’re deploying AI will make these experiences even better.”
