Walmart shares sink as Q2 comparable sales growth disappoints

(Sharecast News) - Shares in Walmart fell sharply on Thursday despite the American retail giant raising its outlook for the current financial year, as the company reported its weakest underlying sales growth in more than six years for its second quarter.

Walmart said US comparable sales rose by just 2.6% year-on-year over the three-month period, held back by new pricing regulations in the pharmacy industry. Excluding those, comparable sales would have risen 3.4%, but that's still below the 3.8% expected by analysts.

That marked the weakest comparable sales growth rate since 2020, causing shares to drop 8.7% to $104.34 shortly after the opening bell on Wall Street.

Revenues for the second quarter totalled $187.9bn, up 5.9% year-on-year on a reported basis, led by 23% growth in ecommerce sales and a 38% jump in ad revenues.

Operating income rose 28.8% to $2.1bn, up 17.4% on an adjusted basis which includes the impact of tariff refunds.

For the third quarter, net sales are expected to grow by just 3.0% to 3.75%, while the full-year growth forecast was adjusted to 4.0% to 5.0%, up from an earlier range of 3.5-4.5%.

"Our business model is only getting stronger and more durable, and we're pleased to raise our guidance for the year," said chief financial officer John Rainey.

He explained that the weaker third-quarter growth guidance relates to the timing shift of its Indian ecommerce division Flipkart's Big Billion Days sales event, which has moved from the third quarter to the fourth.