Walmart Continues on Growth Track in Q2
Walmart Inc. reported second-quarter results for its fiscal year 2025 showing strong growth in revenue and operating income. Worldwide, e-commerce penetration was higher across all segments, and Walmart U.S. comp sales rose 4.2%.
“Our team delivered another strong quarter,” affirmed Walmart President and CEO Doug McMillon. “They work hard every day to help our customers and members save time and money. Each part of our business is growing – store and club sales are up, e-commerce is compounding as we layer on pickup and even faster growth in delivery as our speed improves. Our newer businesses, like marketplace, advertising and membership, are also contributing, diversifying our profits and reinforcing the resilience of our business model.”
Among the quarter’s highlights were a consolidated gross margin rate increase of 43 basis points, led by Walmart U.S. and Walmart International, consolidated operating income growth of $0.6 billion, or 8.5%; an adjusted operating income rise of 7.2% , due to higher gross margins and growth in membership income, as well as reduced e-commerce losses; global e-commerce sales growth of 21%, led by store-fulfilled pickup and delivery and marketplace; global advertising business growth of 26%, including 30% for Walmart Connect in the United States; and the appointment to the Walmart board of directors of Bob Moritz, retired chair of PricewaterhouseCoopers LLC.
These wins come after a solid first quarter reporting lifts in revenue, income and sales.
The company also noted that it saw no signs of customer fraying, with shoppers continuing to be “choiceful and discerning,” and that it had detected promising signs in general merchandise, with flattish to very slightly positive sales for the first time in 11 quarters. Further, the retailer noted that this quarter, it had 7,200 price rollbacks, including a 35% increase in the number of rollbacks in food.
[Read more: Walmart Widens Share of the E-Grocery Pie]
At Walmart U.S., Q2 sales reflected strength in transaction counts and unit volumes across both stores and e-commerce channels. According to the company, Walmart U.S.’ value-convenience proposition continued to resonate with customers and members, with share gains across income cohorts mainly driven by upper-income households. There was robust momentum in e-commerce, with growth of 22%, led by store-fulfilled pickup and delivery, and Walmart Connect advertising sales grew 30%, with strong growth in advertiser counts, including marketplace sellers. Additionally, the gross profit rate increased by 51 basis points, membership income increased, and operating expense deleveraged by 41 basis points. Further, inventory declined 2.6% while the division maintained healthy in-stock levels.
Sam’s Club U.S. logged strong Q2 comp sales, led by food and health and wellness, as well as increases in transactions and unit volumes. The division gained dollar and unit market share in the grocery and general merchandise categories, including apparel and electronics, while e-commerce sales grew 22%. There was also strong growth in membership income, which rose 14.4%, with record total membership and Plus penetration at the quarter’s end. Additionally, the gross profit rate increased by 22 basis points, operating expense deleveraged by 26 basis points and inventory dipped 1.7%, although with sustained strong sales and in-stock levels.
For its Q3 guidance, Walmart expects net sales to grow 3.25% to 4.25% and operating income to grow 3.0% to 4.5% in constant currency. Given the confidence it has in its business, the company has raised its outlook for FY25, with net sales expected to grow 3.75% to 4.75% and adjusted operating income to grow 6.5% to 8.0% in constant currency.
Each week, approximately 255 million customers and members visit Walmart’s more than 10,500 stores and numerous e-commerce websites in 19 countries. With fiscal year 2024 revenue of $648 billion, the retailer employs approximately 2.1 million associates worldwide. Bentonville, Ark.-based Walmart U.S. is No. 1 on Progressive Grocer’s 2024 list of the top food and consumables retailers in North America, while Sam's Club, Walmart warehouse club division, is No. 8. PG also named Walmart one of its Retailers of the Century.
