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Walmart stock jumps on upbeat Q2 results

Walmart Inc. (WMT) slipped to a loss in the second quarter from a profit last year, due to loss from the sale of majority stake in Walmart Brazil and unrealized losses on equity investment in JD.com (JD). The top and bottom line exceeded analysts’ expectations as the company’s efforts to revive its e-commerce business generated the desired results. Shares of the retailer giant jumped more than 10% in the premarket session.

Net loss attributable to the company for the quarter was $861 million or $0.29 per share compared to a profit of $2.9 billion or $0.96 per share a year ago. Adjusted earnings climbed by 34% to $1.29 per share.

Revenues increased by 3.8% to $128 billion. Excluding currency, total revenue rose by 3.6% to $127.8 billion.

The upturn reflects the company’s ongoing efforts to ramp up its digital platform amidst growing competition from Amazon (AMZN). E-commerce sales growth accelerated to 40% in the second quarter.

The primary contributor to the top line growth was a 5.2% increase in sales at Walmart US to $82.8 billion. Walmart International sales rose by 4%, while Sam’s Club registered a 0.6% decline. Tobacco sales negatively impacted comparable sales of Sam’s Club by about 150 basis points.

Comparable store sales growth at Walmart US and Sam’s club were 4.5% and 5% respectively in the second quarter. The Walmart US comps growth was led by the performance of grocery, apparel and seasonal. Strong comp sales were supported by traffic and ticket growth as each exceeded 2%.

Walmart second quarter 2019 earnings
Walmart Q2 2019 Earnings Infographics

Looking ahead into the fiscal year 2019, the company now expects net sales growth of about 2% in constant currency compared to the prior outlook growth of 1.5% to 2%. Adjusted EPS outlook lifted to a range of $4.90 to $5.05 from the previous guidance of $4.75 to $5.00. GAAP EPS is now predicted to be $2.90 to $3.05 for the full year.

Walmart now predicts comparable store sales growth of around 3% in Walmart US and around 3% in Sam’s Club compared to the earlier estimate of up at least 2% in Walmart US and down 1% to flat range in Sam’s Club. Walmart US e-commerce net sales are still anticipated to be about 40%.

Walmart US omnichannel saw significant progress with an expanded online assortment, including 1,100 popular new brands. Grocery pickup is now in more than 1,800 locations, and the company is on track to reach about 40% of the US population by year-end with grocery delivery.

Related: Walmart’s Brazilian strategy appears to be on the right track

Earlier this month, Advent International had invested a majority stake in Walmart Brazil, and the recognition of cumulative foreign currency translation losses are weighing on the second quarter results. The transaction, which closed on August 1, gives Advent International 80% equity stake in Walmart Brazil, with Walmart retaining the rest. The investment will not have any material impact on the EPS in the current fiscal year.

Shares of Walmart ended Wednesday’s regular trading session down 0.69% at $90.22 on the NYSE. The stock gained more than 11% in the past year, while it dropped more than 8% in the year-to-date period.

Related: Walmart earnings preview: E-commerce to be in the limelight once again

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