Walmart has raised its annual forecast and plans to lower prices by passing on tariff refunds
U.S. retailer Walmart reported quarterly revenue that exceeded analysts’ expectations and raised its full-year forecast. The company also plans to use funds from tariff refunds to lower prices for customers in the third quarter, according to CNBC.
In the second fiscal quarter, which ended July 31, Walmart’s revenue rose 5.9% to $187.94 billion, compared with $177.40 billion a year earlier. This exceeded analysts’ forecast of $186.77 billion. Adjusted earnings per share were 81 cents. Net income fell to $6.37 billion, or 80 cents per share, from $7.03 billion, or 88 cents per share, in the same period a year earlier.
The company’s global online sales rose by 23%. Walmart’s comparable sales in the U.S. increased by 2.6%; this figure was partially impacted by a 0.8 percentage point headwind in the health and wellness segment following the implementation of price caps on certain medications. The gross profit margin rose to 25.4%, driven in part by benefits from duty refunds.
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Walmart CFO John David Rainey told CNBC that the company is entitled to approximately $2.9 billion in duty refunds. So far, it has received less than $100 million of that amount. According to him, the company plans to use these funds to lower prices for consumers, and the impact of this decision should be felt in the third quarter. Rainey also noted that Walmart is lowering prices across various product categories, including beef.
At the same time, the company expects more than $2 billion in additional costs this year due to higher fuel prices. For the full fiscal year, Walmart forecasts net sales growth of 4–5%, up from its previous forecast of 3.5–4.5%. Adjusted earnings are expected to be $2.80–$2.87 per share, up from the previously forecast $2.75–$2.85. In the third quarter, the company expects net sales to grow by 3–3.75% and adjusted earnings to be in the range of 62–64 cents per share.
Membership revenue within the company rose 17%, while global advertising revenue increased 38%. Sam’s Club sales in the U.S. increased by 8.8% to $25.7 billion. In premarket trading on Thursday, Walmart shares fell by approximately 5%.
