After issuing a profit warning nearly three weeks ago, Walmart posted results above and below expectations and beat Wall Street forecasts in its second quarter of fiscal 2023.

For the quarter ended July 29, overall revenue was $152.86 billion, up 8.4% from $141.05 billion a year earlier, partly due to due to high inflation, Bentonville, Ark.-based Walmart said Tuesday. In constant currency, revenue increased 9.1% to $153.86 billion. This compares to a revenue increase of 2.4% (0.6% in constant currency) in the fiscal quarter of 2022. Consolidated net sales climbed 8.2% to $151.38 billion.

Walmart US net sales rose 7.1% to $105.13 billion in the second quarter from $98.19 billion a year ago. Same-store sales grew 7.2% year-on-year and 6.5% excluding fuel, with growth of 11.7% year-on-year. The number of transactions edged up 1%, while the average ticket size increased 5.5%, Walmart reported.

Online sales growth doubled in the second quarter from a year ago, for an 18% gain on a two-year stack, Walmart said. (Photo courtesy of Walmart)

In the second quarter of fiscal 2022, when Walmart posted strong pandemic-fueled sales gains, Walmart’s U.S. net sales increased 5.3%, with comp sales up 5 .6% (5.2% excluding fuel). Buyers generated 6.1% more transactions and the average basket decreased by 0.8%.

Walmart’s financial alert on July 25 had estimated growth of 7.5% for overall net sales and 6% for component sales in the United States in the second quarter of 2023.

Walmart’s U.S. e-commerce sales jumped 12% in the second quarter of 2023, contributing 100 basis points to total mockup sales growth, and grew 18% year-over-year, it said. the society. In the prior year period, e-commerce sales increased 6% and contributed 20 basis points to the comp sales increase.

Grocery market share continued to grow in the second quarter as mock-up sales accelerated sequentially and were driven by the strength of food categories (positive growth in mid-teens), strong private label sales and a higher average ticket, Walmart noted. Inflation partly drove strong sales in pet care and paper goods. The retail giant said it also saw a strong start to the back-to-school sales season.

“We are thrilled to see more customers choosing Walmart during this time of inflation, and we are working hard to support them as they prioritize their spending,” Chairman and CEO Doug McMillon said in a statement. “The steps we have taken to improve inventory levels in the U.S., along with a stronger grocery sales mix, put pressure on the second quarter profit margin and our outlook for the year.”

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On a like-for-like basis, food sales increased by a few tens of dollars, but saw a slightly flat negative unit volume at the end of the quarter, according to Walmart.

At Sam’s Club, second-quarter net sales totaled $21.9 billion, up 17.5% from $18.64 billion a year earlier. Scale model sales increased 17.5% overall and 9.5% ex-fuel. The number of transactions increased by 9.8%, while the average ticket fell by 0.2%. E-commerce sales jumped 25% in the quarter, reflecting strong curbside pickup and direct-to-home sales, and contributed 170 basis points to comp sales growth. Membership revenue rose 8.9% as membership numbers hit an all-time high, Walmart reported.

In the prior year quarter, Sam’s Club reported gains of 13.9% in net sales and 13.9% in comp sales (7.7% ex-fuel), with transactions up 5, 1% and basket size up 2.5%. The warehouse club chain saw weak growth among teens in fresh, frozen and chilled foods as well as groceries, beverages and consumables. E-commerce sales increased 27% and contributed 180 basis points to comp sales growth.

Walmart’s combined U.S. sales, including Walmart US and Sam’s Club, increased 8.8% for the second quarter of 2023 and were up 7% excluding fuel.

For Walmart International, net sales for the second quarter of fiscal 2023 increased 5.7% to $24.35 billion from $23.04 billion a year earlier. On a constant currency basis, the business unit’s net sales increased 9.9% to $25.31 billion. This compared to a decline in net sales of 15.2% (-24% in constant currency) in the 2022 quarter.

Ultimately, Walmart reported net income for the second quarter of fiscal 2023 of $5.15 billion, or $1.88 per diluted share, compared to $4.28 billion, or $1.52 per diluted share, one year ago. Adjusted earnings per share (EPS) for the fiscal 2022 quarter was $1.77, well above the upper end of Wall Street’s estimate, from $1.78 a year earlier.

In its earnings alert last month, Walmart said it expected adjusted EPS to decline 8% to 9% for the second quarter. Analysts, on average, had forecast Walmart’s second-quarter adjusted EPS at $1.60, with estimates ranging from a low of $1.50 to a high of $1.64, according to Zacks Investment Research.

“We made good progress throughout the quarter operationally to improve our supply chain costs, and that work continues,” according to McMillon. “We continue to build on our strategy to grow our digital business, including the continued strength we see in our international market.”

Looking ahead, Walmart expects consolidated net sales growth for fiscal 2023 (constant currency) of 4.5% (5.5% excluding divestitures). This includes comp sales growth of 4% (excluding fuel) for Walmart US The retailer reaffirmed comp sales growth of 3% in the second half of 2023 for Walmart US

“Seeing the second half forecast still calling for a moderation in comps from +6% to +3%, even after the improvement at the end of the second quarter, implies that even with lower gasoline prices, consumers of Walmart still have to make weekly compromise and cut decisions,” Jefferies analyst Stephanie Wissink wrote in a research note Tuesday. “We are encouraged by the stock gains at Walmart US and continued competitive strength at Sam’s Club.”

Walmart expects Adjusted EPS to decline 9% to 11% (8% to 10% excluding divestitures) for fiscal 2023. The Wall Street consensus estimate is for Adjusted EPS of $5.68, with projections ranging from $5.58 to $5.77, according to Zacks.

As of July 29, Walmart had 10,585 stores worldwide, including 4,735 Walmart stores and 600 Sam’s Club stores in the United States and 5,250 international locations.