Walmart advanced in the second quarter, gaining both store and digital sales, as the retailer continued to ramp up its e-commerce and technology investments.
Company net revenues were $123.36 billion versus $120.85 billion in the year-earlier second quarter. Net sales were $121.95 billion versus $119.41 billion in the previous period. Operating income was $5.97 billion versus $6.17 billion in the quarter a year before. Comparable sales at namesake stores in the U.S. increased 1.8% with traffic up 1.3% and average ticket up 0.5% in the quarter year over year. Comp sales at Sam’s Club gained 1.2% in the quarter compared to the period a year past with traffic up 2.1% but ticket down 0.9%.
E-commerce gained, led by organic growth through Walmart.com. Net sales and gross merchandise volume grew 60% and 67%, respectively, as customers responded well to new initiatives and an expanded assortment of more than 67 million SKUs, according to the company.
For the second quarter ended July 31, Walmart posted company consolidated net income of $2.9 billion, or 96 cents per diluted share, versus $3.77 billion, or $1.21 per diluted share, in the year-prior quarter.
Walmart stated that second quarter earnings per diluted share included a charge of 17 cents for loss on extinguishment of debt in connection with the company’s recently completed tender offers. The gain from the sale of the Suburbia business in Mexico, which benefited earnings by five cents, partially offset the debt extinguishment charge.
In a conference call, Brett Biggs, Walmart evp/CFO, emphasized that, with the one-time charges in the latest completed quarter and a 14 cents per diluted share gain in the period a year prior related to the sale of the Yihaodian business in China set aside, Walmart’s EPS gained 1% year over year. In addition, he said the company’s gross margin slipped by 11 basis points due to strategic price investments and impact of e-commerce operations. Walmart topped a MarketBeat analyst average earnings per diluted share estimate by a penny.
In the conference call, Doug McMillon, Walmart CEO, stated that the retailer is advancing its strategy of making life easier for busy families in several ways, with digital supporting its efforts. He pointed to a test of associate delivery of Walmart.com orders as an example as to how the company is pursuing that strategy. He also noted that by the end of the year, Walmart would operate about 100 automated pickup towers that will permit customers to stop in at stores across the U.S. and grab online orders. An Easy Reorder service on Walmart.com is affording customer visibility to their past in-store and online purchases and easy reorder of items they bought frequently in the past.
For back to school, McMillon indicated, Walmart has been operating a dedicated destination on Walmart.com that enables customers to shop school supply lists from more than a million classrooms across the U.S. for in-store pick up or home delivery.
He also indicated that Walmart continues to engage in tests of digital endless aisle shopping, robotics and image analytics to scan aisles for outs as well as using machine learning to assist merchants with pricing. Sam’s Club members, he maintained, continue to provide positive feedback on the convenience associated with the company’s Scan & Go initiative, which will expand this year to include more Sam’s Clubs and Walmart U.S. stores. McMillon added that Walmart has experienced favorable results from the rollout of online grocery, which is now in more than 900 U.S. locations, and that the company would expand the service in markets around the world.
