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As inflation cools and consumers continue to hunt for bargains, Walmart (WMT) is getting a boost. Shares of Walmart WMT-0.54% rose 7% on Thursday, after the retail giant reported robust second quarter earnings. Its most recent quarter was fueled by higher-income households turning to the discount retailer, as well as its advertising and e-commerce units.
“Value-convenience proposition continues to resonate with customers and members,” the company said in its latest earnings release. It added that share gains grew across income cohorts but were “primarily driven by upper-income households.”
In March, Walmart said it would remodel about 650 of its stores in a bid to attract more affluent shoppers. At the time, the company said it would upgrade its lighting, increase its mannequin headcount, reduce displays, spotlight high-end products.
Walmart’s CEO Doug McMillion said that the company’s newer businesses including its online marketplace, advertising unit, and membership program, are also contributing to profits.
Walmart’s results pushed its stock up in early hours, to roughly $73 per share.
The Arkansas-based comapny beat Wall Street’s expectations. During the second quarter, it reported revenue of $169.3 billion, about $0.67 cents a share. The Street forecasted it would report $168.6 billion, roughly $0.65 cents a share, according to FactSet.
Walmart, the largest U.S.-based retailer, also lifted its full year guidance, citing consistent consumer demand. Albeit, the retailer said it expects consumer demand to be slightly lower than Wall Street’s predictions. For fiscal 2025, it expects sales growth to increase between 3.75% and 4.75%. It had previously forecasted sales growth of 3% to 4%.
Walmart’s earnings come closely after it saw a huge stock gain in June, in which shares hit an all-time high after JPMorgan analysts upgraded their rating due to the retailer’s “strong balance of defense and offense” against a softer consumer spending backdrop.
UBS analyst Michael Lasser said in a research note that Walmart is among those that “surely performed better than others,” due in part to its “resilience and strategic investments.” Better-than-expected sales may have fallen short of outperforming, Lasser said, but the company’s focus on innovation, including its chef-inspired Bettergoods private label, and back-to-school essentials helped it reach consumers.