Walmart to Wall Street: We've Got This

With questions about inflation, the course of the COVID-19 pandemic and lingering supply-chain challenges hanging in the air like so much late-summer humidity, Walmart executives sought to reassure investors that the company is more nimble than ever and is well-positioned to manage whatever unfolds in the back half of the fiscal year.

"The underlying business is really strong," Walmart Chief Financial Officer Brett Biggs said during the Bentonville, Ark.-based retailer's second-quarter earnings call. What that looked like in the second quarter, he noted, was comp sales growth of 5.2% year over year for Walmart U.S. and 7.7% for Sam's Club, with Walmart U.S. posting even more-robust transaction growth of 6.1%. Walmart U.S. e-commerce sales, while seeing slower growth relative to their blockbuster expansion in 2020, managed to climb 6% year over year and are up 103% on a two-year stack. 

Another encouraging sign, according to Walmart U.S. President and CEO John Furner, is that unit share in categories including grocery grew faster than dollar share. "Our price value is as strong as ever," Furner said. Walmart raised its full-year fiscal guidance for comp sales growth of 5% to 6% for Walmart U.S. and 7.5% to 8.5% for Sam's Club, excluding fuel. Company revenue in the second quarter was $141 billion, up 2.4%.

Biggs noted that Walmart expects to gain further share in grocery in the months ahead, even as the company sees "a bit more cost inflation than normal." Improved inventory levels vs. those Walmart struggled with earlier in the pandemic place the company in a good spot heading into the second half of fiscal 2022 even as some general-merchandise supply-chain issues persist, he said. In addition, within grocery, continued investments in the quality and merchandising of, especially, fresh produce and fresh meat boost Walmart's positioning as a true one-stop shopping destination—regardless of whether consumers are ordering online for pickup or shopping in store, Biggs and Furner said. 

"No matter how customers want to shop, we're here for them," Biggs said. Comp sales for Walmart U.S. increased in each month of the second quarter, and the start of the third quarter suggests a strong back-to-school shopping season, he added.

With Walmart launching several new digitally oriented services and businesses in the past year—including the Walmart membership service, which celebrates its first anniversary in September, a fintech startup and the rebranded Walmart Connect advertising platform—what's the biggest strategic priority for the company? "Speed," President and CEO Doug McMillon said. 

"We're trying to change the company" to use and find new uses for homegrown digital innovations that will improve productivity and create a smarter, more intuitive and more streamlined experience for Walmart customers, he said. "Our purpose and our values are constant, but everything else is open to change," McMillon said. "This team is building for the mid to long term."