Why Walmart Stock Fell Today
Key Points
Higher energy costs are forcing shoppers to reduce spending.
Walmart is cutting prices to spur growth.
- 10 stocks we like better than Walmart ›
Shares of Walmart (NASDAQ: WMT) sank on Thursday after the retail titan's sales fell short of investors' expectations.
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Solid, but slowing, growth
Walmart's revenue rose 5.9% year over year to $187.9 billion in the second quarter.
The gains were fueled by a 23% rise in e-commerce sales, driven by a steadily expanding third-party marketplace and higher demand for in-store pickup and delivery services. A 38% surge in global advertising sales also contributed to the gains.
"Our multi-year growth in e-commerce is evidence that customers are choosing Walmart because we deliver price, speed, and convenience across a broad assortment," CEO John Furner said.
However, Walmart's U.S. comparable sales, which include revenue from stores open for at least one year, grew by a modest 2.6%.
That marked the company's slowest comp growth since the early stages of the pandemic. It was also below Wall Street's estimates of 3.5%.
Everyday lower prices
Still, tariff refunds helped to drive Walmart's adjusted operating income up by 17.4% to $9.2 billion. The retail giant's adjusted earnings per share, in turn, increased 19.1% to $0.81.
Walmart intends to reinvest some of its tariff-related savings into price cuts. Higher gasoline prices continue to weigh on consumers' budgets. The discount store chain plans to relieve some of the pressure as it seeks to gain market share.
In all, management sees Walmart's full-year net sales growing by 4% to 5%, with adjusted operating income up 7% to 8.5%.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.
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