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Retail behemoth Walmart (NYSE:WMT) announced better-than-expected results in Q2 CY2024, with revenue up 4.8% year on year to $169.3 billion. It made a non-GAAP profit of $0.67 per share, improving from its profit of $0.61 per share in the same quarter last year.
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Walmart (WMT) Q2 CY2024 Highlights:
- Revenue: $169.3 billion vs analyst estimates of $167.4 billion (1.2% beat)
- EPS (non-GAAP): $0.67 vs analyst estimates of $0.65 (3.8% beat)
- Raised full year guidance for net sales and EPS (non-GAAP)
- Gross Margin (GAAP): 25.1%, in line with the same quarter last year
- EBITDA Margin: 6.6%, in line with the same quarter last year
- Free Cash Flow Margin: 3.7%, down from 5.4% in the same quarter last year
- Same-Store Sales rose 4.2% year on year (6.3% in the same quarter last year)
- Market Capitalization: $552.3 billion
Large-format Grocery & General Merchandise RetailerBig-box retailers operate large stores that sell groceries and general merchandise at highly competitive prices. Because of their scale and resulting purchasing power, these big-box retailers–with annual sales in the tens to hundreds of billions of dollars–are able to get attractive volume discounts and sell at often the lowest prices. While e-commerce is a threat, these retailers have been able to weather the storm by either providing a unique in-store shopping experience or by reinvesting their hefty profits into omnichannel investments.
Sales GrowthWalmart is a behemoth in the consumer retail sector and benefits from economies of scale, an important advantage giving the business an edge in distribution and more negotiating power with suppliers.
As you can see below, the company’s annualized revenue growth rate of 5.1% over the last five years was sluggish as its store count dropped, signaling that growth was driven by more sales at existing, established stores.
This quarter, Walmart reported decent year-on-year revenue growth of 4.8%, and its $169.3 billion in revenue topped Wall Street’s estimates by 1.2%. Looking ahead, Wall Street expects sales to grow 2.9% over the next 12 months, a deceleration from this quarter.
Same-Store SalesSame-store sales growth is an important metric that tracks demand for a retailer’s established brick-and-mortar stores and e-commerce platform.
Walmart’s demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company’s same-store sales have grown by 5.9% year on year. Given its declining store count over the same period, this performance stems from higher e-commerce sales or increased foot traffic at existing stores, which is sometimes a side effect of reducing the total number of stores.
In the latest quarter, Walmart’s same-store sales rose 4.2% year on year. This growth was a deceleration from the 6.3% year-on-year increase it posted 12 months ago, showing the business is still performing well but lost a bit of steam.
Key Takeaways from Walmart’s Q2 Results We enjoyed seeing Walmart exceed analysts’ revenue and EPS expectations this quarter. That the company raised its full year outlook for net sales and EPS as well is another major positive. Overall, this was a solid quarter, especially as other consumer-facing companies warn of tepid spending trends and macro headwinds. The stock traded up 6.6% to $73.10 immediately after reporting.
