NEW YORK (AP) — Walmart Inc. powered through an uncertain economic environment and tariff concerns and delivered solid second-quarter financial results that showed it keeps pulling in shoppers and outpacing peers like Target.
The nation's largest retailer also on Thursday increased its annual profit and sales outlook.
The Bentonville, Arkansas-based reported an increase of 4.6% in comparable sales for the latest quarter — those coming from established stores and online channels. And executives noted it's wooing consumers across all income cohorts, particularly higher income shoppers, with its speedy deliveries, grocery discounts, and trendier fashion.
Walmart's results marked a big difference from that of its rival Target, which reported on Wednesday another quarter of comparable sales declines. The Minneapolis-based discounter has been struggling to find its footing as its pinched shoppers defect to Walmart and other stores where they perceive better prices and merchandise. Target named a 20-year veteran to succeed its CEO Brian Cornell on Feb. 1.
Walmart noted that its profitable e-commerce operations, its mix of items like clothing that carry high profit margin items well as advertising revenue have all given the retailer more flexibility in absorbing some of the higher costs from tariffs. Walmart's CEO Doug McMillon also told investors on a call Thursday that the impact of tariffs has been gradual enough that changes in spending behavior have been muted.
But when the discounter does increase prices, lower-income and middle income customers are trading down to lower priced items or moving out of that merchandising category. And he said that as Walmart replenishes inventory at post-tariff price levels, Walmart will continue to see cost increases each week.
“We're doing what we said we would do,” McMillon told analysts. “We’re keeping our prices as low as we can for as long as we can. Our merchants have been creative and acted with urgency to avoid what would have been additional pressure for our customers and members.”
A growing list of companies, including Procter & Gamble, E.lf. Cosmetics, Black & Decker and Ralph Lauren, told investors in recent weeks that they planned to or already had raised prices because of tariffs, though modestly.
None of that has derailed consumer spending. Shoppers spent at a healthy pace in July, particularly at the nation’s auto dealerships, as signs emerged that President Donald Trump’s trade policies were taking a toll on jobs.
Some of that spending may have been shoppers buying furniture and other imported items to get ahead of expected price increases, analysts said.
On Tuesday, Home Depot, the nation’s largest home improvement retailer, reported improved sales during its latest quarter as consumers remained focused on smaller projects. Like Walmart, Home Depot's performance missed Wall Street’s expectations.
The Atlanta-based company also said shoppers should expect modest price increases in some categories as a result of additional costs from tariffs, which are taxes on imports. Home Depot reported comparable sales increase of 1.4% in line with what home improvement rival Lowe's reported on Wednesday.
But it’s Walmart that serves as a barometer of spending given its outsized power in American retailing. The company maintains that 90% of U.S. households rely on Walmart for a range of products, and more than 150 million customers shop on its website or in its stores every week.
Walmart said in May that prices had started to increase in late April and got higher in May. But it said Thursday that it had introduced 7,400 price rollbacks, or temporary discounts, across the aisles in the latest quarter.
The company said it earned $7.03 billion, or 88 cents per share, for the three-month period that ended ended July 31. That compares with $4.50 billion, or 56 cents per share, a year ago.
Sales rose nearly 5% to $177.4 billion.
Walmart’s U.S. comparable sales of 4.6% in the quarter was slightly higher than the 4.5% gain in the fiscal first quarter. Groceries and health and wellness items fueled the growth, the company said.
Global e-commerce sales rose 25%, above the 22% growth in the fiscal first quarter.
The retailer said roughly one-third of deliveries from its U.S. stores in recent weeks were orders requesting delivery in three hours or less, and 20% of those orders made it to customers in a half-hour or under.
Despite Walmart’s solid quarter, its stock price was down close to 5% late Thursday morning as its earnings per share came in below what analysts had expected. Analysts were expecting 73 cents per share on sales of $175.93 billion for the quarter, according to FactSet.
Per share results, excluding effects of charges related to certain legal matters and from business restructuring, was 68 cents, Walmart said.
One big expense for $450 million was tied to settlements over worker and shopper injury claims, Walmart said. A company spokesperson said the cost per claim was increasing but not the total number.
The company said Thursday it expects earnings per share to be in the range of 58 cents to 60 cents for the current quarter. Analysts expect 57 cents per share, according to FactSet.
For the year, Walmart raised its per-share estimates to a range of $2.52 to $2.62, up from a previous estimate of a $2.50 to $2.60 range. It said 2025 sales are anticipated to increase 3.75% to 4.75%, more than it projected in May.
