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Walmart Inc raised its annual profit forecast for the second straight quarter after scoring new sales gains with bargain-hunting US shoppers.
Food revenue continued to rise strongly and Walmart’s general merchandise business was stronger than the company expected at the beginning of the second quarter, said Chief Financial Officer John David Rainey.
The retailer is also still benefiting from stepped-up demand among higher-income customers.
“We’re gaining share and our value proposition continues to resonate, both for value and convenience,” Rainey said in an interview as Walmart reported results for the three months ended in late July. “The consumer is still spending, but they’re being discerning in their spending.”
The improved forecast underscores the resilience of Walmart’s massive grocery business, which is enabling the company to grab more sales even as consumers think twice before buying discretionary goods. Target Corp and Home Depot Inc reported comparable-sales declines as consumers continued to pull back from nonessential items.
The shares rose 2.6% in premarket trading.
Walmart climbed 12% this year through, while the S&P 500 Index rose 15%.
Adjusted earnings for the fiscal year ending in early 2024 will be as much as $6.46 a share, Walmart said in its second-quarter results statement. The world’s largest retailer had previously capped its profit outlook at $6.20 a share. Wall Street had been estimating $6.28.
The annual outlook includes a headwind of only 5 cents a share from last-in, first-out accounting, compared with a previous forecast of 14 cents.
During the fiscal second quarter, comparable sales at Walmart’s US unit climbed 6.4%, well ahead of the 4% average of analyst estimates compiled by Bloomberg. For the company as a whole, adjusted earnings of $1.84 a share topped the $1.70 projected by analysts.
Chief Executive Officer Doug McMillon and other leaders of the Bentonville, Arkansas-based company are scheduled to discuss the results on a conference call.