By Savyata Mishra and Siddharth Cavale
(Reuters) -Walmart on Thursday raised its fiscal year sales and profit forecast, driven by strong demand from shoppers across all income levels, who have turned to the world’s largest retailer as they worry about rising costs.
Walmart’s results show it has continued to benefit from growing price sensitivity among Americans, earning revenue of $177.4 billion in the second quarter. Analysts on average were expecting $176.16 billion, according to data compiled by LSEG.
Consumer sentiment has weakened due to fears of higher inflation due to tariffs, hitting the bottom lines of some retail chains, but Walmart’s sales have remained resilient.
Its shares, however, dipped 2.8% in premarket trading as its second-quarter profit was lower than expected.
Walmart had warned it would increase prices this summer to offset tariff-related costs on certain goods imported to the U.S., a move that drew criticism from President Donald Trump. Several other apparel, footwear, and packaged goods retailers have issued similar warnings.
Walmart CEO Doug McMillon said the impact of tariffs has been gradual enough to mute any change in customer habits.
“But as we replenish inventory at post-tariff price levels, we’ve continued to see our cost increase each week,” he said on a call with analysts.
Still, Walmart raised its full-year sales forecast. Walmart expects annual sales to grow in the range of 3.75% to 4.75%, compared to its prior forecast of a 3% to 4% increase. Adjusted earnings per share are expected in the range of $2.52 to $2.62, compared to its previous range of $2.50 to $2.60.
The Bentonville, Arkansas-based chain got a boost from a sharper online strategy as more customers relied on home deliveries. Its global e-commerce sales jumped 25% during the quarter, and it touted that one-third of deliveries from stores took three hours or less.
SECOND-QUARTER PROFIT BELOW EXPECTATIONS
The company’s adjusted earnings per share of 68 cents in the second quarter fell short of analyst expectations of 74 cents.
“We think Street estimates got ambitious and the miss is not indicative of a slowdown in business fundamentals,” said RBC Capital Markets analyst Steven Shemesh.
Walmart’s total U.S. comparable sales rose 4.6%, fueled by solid demand for fresh food, pantry and dairy products, and branded and over-the-counter medicines, beating analysts’ estimates of a 3.8% increase. The company noted strong customer response to over 7,400 “rollbacks,” its term for discounted prices, with 30% more rollbacks on grocery items.
Average spending at the till rose 3.1% from an increase of 0.6% last year, but growth in customer visits fell to 1.5% from 3.6% in the year-earlier period. Walmart logged 40% growth in marketplace sales, including electronics, automotive, toys, and media and gaming.
A day earlier, Target warned of tariff-induced cost pressures, even as it reiterated that price increases would be considered only as a last resort.
Two-thirds of Walmart’s U.S. sales are of domestically-sourced products, executives had said last quarter, which gave it some insulation from tariffs compared to competitors.
Walmart forecast third-quarter net sales growth in a range of 3.75% to 4.75%, excluding currency fluctuations.
(Reporting by Savyata Mishra in Bengaluru and Siddharth Cavale in New York Editing by Rod Nickel)
