Walmart Q2 Earnings: Smashes Expectations, Strong E-Commerce Growth and Raised Outlook

Walmart Inc WMT reported second-quarter FY24 sales growth of 5.7% year-on-year to $161.10 billion, beating the analyst consensus estimate of $160.27 billion.

Net sales from Walmart U.S. increased 5.4% Y/Y, Walmart International rose 13.3%, and Sam's Club fell 0.3%.

Excluding fuel, Walmart's U.S. Q2 comp sales grew 6.4%. eCommerce growth was 24%.

Global advertising business grew by over 35%.

The consolidated gross margin rate gained 50 basis points to 24% on lapping elevated markdowns and supply chain costs, partially offset by ongoing mix pressure in grocery and health & wellness.

The operating margin was 4.5%, and operating income for the quarter rose 6.7% to $7.3 billion.

Cash provided by operating activities for six months totaled $18.2 billion, with a free cash flow of $8.98 billion. The company held $13.88 billion in cash and equivalents as of July 31, 2023.

Adjusted EPS was $1.84, beating the consensus of $1.70. The return on investment for the quarter declined 100 basis points to 12.8%, down by 100bps.

Year-to-date, Walmart repurchased 8 million shares worth $1.2 billion with a remaining share repurchase authorization of $18.2 billion.

Adjusted EBITDA for Q2 was $10.3 billion with a 6.4% margin.

Outlook: Walmart sees a Q3 FY24 adjusted EPS of $1.45 - $1.50 (consensus $1.49). Q3 net sales growth of 3% in CC.

For FY24, the company raised FY24 adjusted EPS guidance from $6.10 - $6.20 to $6.36 - $6.46 versus an estimate of $6.27. It raised FY24 net sales growth outlook to 4% - 4.5% from 3.5% earlier.

Price Action: WMT shares are trading higher by 1.29% at $161.32 in premarket on the last check Thursday.