The numbers
46%: Growth in Walmart’s global ad business during the second quarter, including Vizio.
31%: Walmart Connect’s growth in the U.S. during Q2. Advertising grew by 15% for Walmart international, led primarily by Indian ecommerce company Flipkart. Walmart bought a majority stake in Flipkart in 2018.
$177.4 billion: Revenue during Q2, up 4.8%, or 5.6% adjusted for fluctuations in exchange rates.
25%: Walmart’s global ecommerce business growth during Q2.
$0.68: Earnings per share during Q2 for Walmart. The number fell short of analysts’ expectations, leading to share prices dropping more than 2% during pre-market trading.
The watercooler talk
Investors weren’t thrilled to see Walmart’s earnings come in lower than expected, leading to a drop in share prices despite the retailer beating sales expectations for the quarter.
During the earnings call, Walmart chief financial officer John David Rainey attributed that drop to unexpectedly high costs related to general liability and workers’ compensation claims. Walmart self-insures, and saw $450 million above planned expenses for the second quarter, which had an impact on the retailer’s operating income.
“Unexpected costs are part of managing a business of this complexity, and while these costs put pressure on operating income growth for the quarter and for the year to date period, they don’t change our annual or long-term outlook, nor our conviction in our profit growth trajectory,” Rainey said.
Merchants have been working to navigate price impacts related to tariffs during the quarter, said Walmart president and CEO Doug McMillon, but prices will continue to increase.
“The impact of tariffs has been gradual enough that any behavioral adjustments by the customer have been somewhat muted,” McMillon said. “But as we replenish inventory at post-tariff price levels, we’ve continued to see our costs increase each week, which we expect will continue into the third and fourth quarters.”
The key quote
Walmart’s AI investment isn’t making money yet, McMillon told investors.
“As it relates to AI, I don’t think it’s lifting our top line sales yet,” he said. “It’s exciting to think about the productivity opportunities […] just think about all the inventory management improvement that we can make with it.”
