Walmart reported its slowest U.S. comparable sales growth in six years for its most recent fiscal quarter, attributing some of the slowdown to regulatory impacts on its pharmacies. The retail behemoth saw U.S. comparable sales, a key metric including sales at stores open at least a year and associated online sales, increase by 2.6% in the second quarter. This marks a deceleration from the 4.1% growth recorded in the previous quarter.
According to Walmart, federal legislation requiring pharmacies to dispense certain high-cost Medicare drugs at capped prices affected the figures. Excluding the wellness category encompassing its pharmacies, comparable sales rose 3.4%. However, even with this adjustment, the growth fell short of the 3.8% increase anticipated by industry analysts surveyed by FactSet.
Walmart's U.S. e-commerce business, a significant growth driver, expanded by 24%, a slight decrease from the 26% pace seen in the first quarter.
As one of the first major retailers to release second-quarter results, Walmart's performance offers insights into consumer behavior amidst ongoing price pressures. The company is often viewed as a barometer of consumer spending due to its extensive customer base, with more than 150 million customers engaging weekly through its stores and online platforms.
Recent economic indicators, including weaker-than-expected July retail sales data and growing consumer pessimism highlighted in a University of Michigan survey, underscore the potential impact of rising costs for essentials like gas and groceries on American households. Walmart's latest figures reveal the smallest comparable store sales gain since a 1.9% increase for the quarter ending Jan. 31, 2020.
Despite the slowdown in comparable sales growth, Walmart has been expanding its customer base and capturing a larger share of higher-income households, with the most significant market share gains occurring among households earning over $100,000 annually.
The company reported a quarterly net income of $6.37 billion, or 80 cents per share, for the three months ending July 31. Adjusted earnings per share came in at 81 cents, surpassing Wall Street's expectation of 74 cents. Total sales for the quarter increased by 5.9% to $187.94 billion, exceeding analysts' predictions of $186.62 billion.
Looking ahead, Walmart projects third-quarter earnings per share between 62 cents and 64 cents, with sales expected to grow between 3% and 3.5%. These forecasts fall below analyst expectations of 68 cents per share and $188.19 billion in sales. For the full fiscal year, Walmart now anticipates earnings per share in the range of $2.80 to $2.87 and sales growth between 4% and 5%. This guidance is below the analyst consensus of $2.90 per share and $752.06 billion in annual sales.