In an August 15^th release, Walmart Inc. (WMT) posted financial results for Q2 of Fiscal 2025 ending July 31^st 2024. All U.S. omni-channel retailers are subject to the same pressures from increased costs for goods, transport and labor in a competitive environment with most consumer demographics and especially lower income earners concerned over expenditure. As a multinational company, Walmart faces additional risks associated with currency fluctuation, geopolitical events and adverse policies by regulators in host-nations. Walmart serves as a bellwether for U.S retail combining groceries, clothing, electronics, drugs, toiletries and household necessities.

For the 2^nd quarter of FY 2025 net income was $4,501 million on total revenue of $169,355 million that beat consensus estimates for revenue and EPS, yielding a profit margin of 2.7 percent.  Comparable figures for Q2 FY 2024 ending July 31^st 2023, were net income of $7,891 million on total revenue of $161,632 million with a profit margin of 4.9 percent. Diluted EPS fell from $0.97 for Q2 FY 2024 to $0.50 for the most recent quarter.

Comparing Q2 FY 2025 with the corresponding quarter of the previous year, revenue was up 4.8 percent; comparable store sales up 4.2 percent for the consolidated enterprise; gross margin rose from 23.8 percent to 24.2 percent and operating margin increased from 4.5 percent to 4.7 percent for the most recent quarter.

In commenting on Q1 results, in the Investors’ Call, Doug McMillon, CEO and president stated “We had another good quarter, with strong sales growth and even stronger profit growth, exceeding our expectations, The strength we saw for the quarter was broad-based. Our business outside the U.S. continues to lift the total company in terms of sales and profit growth.”

 He added “In the U.S., for both Walmart and Sam’s Club, comp. sales were fairly consistent throughout the quarter. Food continues to be strong, although general merchandise showed a small improvement. Our U.S. health and wellness business in Walmart and Sam’s Club, primarily due to sales of GLP-1 drugs, is contributing to our strong comp sales”.

In assessing the business environment McMillon observed “So far, we aren’t experiencing a weaker consumer. Our customers and members continue to want four things: They want value, they want a broad assortment of items and services, they want a convenient and enjoyable experience buying them, and they want to do business with a company they trust. These four things are constant, but the way we provide them is changing”.

Forward guidance for FY 2025 was adjusted upwards from previously released ranges and included:- A 3.8 to 4.8 percent increase in consolidated revenue; Operating income of 6.5 to 8.0 percent, and an adjusted EPS of $2.35 to $2.43.Capital expenditure will be equivalent to 3.0 to 3.5 percent of net sales.

For Q2 FY 2025 segment results comprised:-

• Walmart US: Net sales of $115,300 million, up 4.1 percent over Q2 FY 2024. Operating income $6,600 million with strong gains in groceries and general merchandise up 7.8 percent. Comparable same-store sales were up 4.2 percent (excluding fuel). Transactions were up 3.6 percent with ‘ticket’ up 0.6 percent. E-commerce, was up 22 percent over the corresponding quarter of FY 2024. Inventory declined by approximately 2.6 percent.
• International: Net sales of $29,600 million, up 7.1 percent. Operating income was $1,400 million up 14.3 percent from Q2 FY 2024. Growth in E-commerce, was up 18 percent over the corresponding quarter of FY 2024.
• Sam’s Club US: Net sales of $22,900 million, up 4.7 percent excluding fuel. Operating income was $600 million. Comparable same-store sales were up 5.2 percent with a 6.1 percent increase in transactions but offset by a 0.5 percent reduction in ‘ticket’. Membership revenue grew 14.4 percent. Growth in E-commerce, increased 22 percent over the corresponding quarter of FY 2023, attributed to curbside pick-up service and delivery.

Walmart operates more than 10,500 stores worldwide of which 5,400 are in the U.S. including 600 Sam’s Club warehouses. Walmart trades under 46 banners in 19 nations and employs 2.1 million.

On July 31^st 2024, Walmart posted assets of $254,440 million including goodwill of $27,930 million. Long-term debt and lease obligations amounted to $54,336 million. The Company had an intraday market capitalization of $590,800 million on August 19^th. WMT trades with a forward P/E of 30.4 and has ranged over a 52-week period from $49.85 to $74.44 (post-split) with a 50-day moving average of $68.80.  Twelve-month trailing operating margin was 4.7 percent and profit margin 2.3 percent.  Return on assets over the past twelve months was 7.0 percent with a return on equity 18.3 percent. At close of trading on August 14^th pre-release, WMT was priced at $68.61`. On May 15^th WMT opened post-release at $74.09, up 8.0 percent.