Walmart(US:WMT) Zhi Tong Cai Jing·2025-08-21 13:07Core Viewpoint - Walmart's Q2 earnings fell short of expectations due to increased insurance claims and one-time costs, despite a revenue increase of 4.8% year-over-year to $177.4 billion, which exceeded market forecasts [1] Financial Performance - Q2 revenue rose 4.8% to $177.4 billion, surpassing market expectations [1] - Non-GAAP EPS was $0.68, below market expectations due to increased insurance claims [1] - Operating profit decreased by 8.2% due to special legal and restructuring costs, while adjusted operating profit grew by 0.4% due to strong sales performance [1] - Walmart raised its full-year sales guidance to a growth of 3.75% to 4.75%, up from a previous forecast of 3% to 4% [1] Business Segments and Growth Drivers - Global e-commerce sales increased by 25%, driven by in-store pickup and delivery services [2] - Advertising revenue grew by 46%, with Walmart Connect in the U.S. increasing by 31% [2] - Membership and other profits rose by 5.4%, with global membership profits up by 15.3% [2] - Same-store sales at Sam's Club, excluding fuel, grew by 5.9%, exceeding analyst expectations of 5.2% [2] Pricing and Cost Management - Walmart noted that tariff costs are expected to rise in the second half of the year, although the impact has been limited so far, with U.S. goods prices only increasing by 1% this quarter [3] - The company has slightly raised prices on some items while absorbing costs on others, managing price adjustments on a per-item basis [3][5] - Walmart's strategy includes stocking up on inventory to prepare for the second half of the fiscal year and the holiday season, with inventory growth of 2.2% in the U.S. [5] Consumer Behavior and Market Position - Despite economic pressures, Walmart has not observed significant changes in consumer spending, with private label sales remaining stable compared to last year [4] - The company aims to expand market share by leveraging its global supply chain for efficient procurement and favorable supplier agreements [6] - Q2 same-store sales in the U.S. grew by 4.6%, surpassing market expectations of 4.1%, with transaction numbers increasing by 1.5% and average transaction amounts rising by 3.1% [6] Challenges and Outlook - Increased claims and restructuring costs have impacted profitability, with rising costs associated with general liability and workers' compensation claims [7] - The retail environment remains stable, supported by a relatively stable job market and promotional activities [7] - Competitors like Home Depot and Target have reported optimistic demand forecasts, indicating a mixed retail landscape [7]