Walmart Sees Colossal Growth in U.S Sales

Walmart shares soared over 10% on Thursday after the company reported second quarter financial results that had Wall Street cheering.

The company reported earnings and sales that topped analysts’ expectations. Walmart reported adjusted earnings per share: $1.29 while analysts had expected just $1.22. Revenue at $128.03 billion was also ahead of the $125.97 billion that was expected. Same store-sales for the quarter saw a growth of 4.5% in the U.S. while analysts were waiting for just 2.4%.

Walmart said that U.S. online sales climbed 40 percent during the quarter and that it is expecting an increase of 40 percent for the full year. It was the company’s best sales in a decade and showed that consumers in the U.S. may be the strongest right now in years due to tax cuts and job growth.

According to economists, consumer spending has been helped by the taz bill and that job creation in the U.S. is strong. Unemployment recently went below 4%.

Walmart U.S. CEO Greg Foran said that Walmart is attracting new customers as it expands online
groceries, but existing customers are also adding more to their carts.

“There’s no question that the consumer is out spending. One of the things we saw in retail sales was even though we don’t have more wage growth, we have more wages. We have more paychecks. That critical mass is showing up and actually spending,” remarked Diane Swonk, chief economist at Grant Thornton.

“We have very robust spending on discretionary items. They’re going out to dinner, and we know the Fourth of July holiday was one of the most traveled on record.”

“I think the tax cuts are certainly a factor. You just saw strong economic growth in the quarter. The U.S. economy is doing pretty well, and that’s going to be reflected in numbers like Walmart’s. It’s about time,” chimed in Paul Hickey, co-founder of Bespoke.

“Walmart is all over the country, it’s middle America. I think it’s a good representative of the consumer. I think we’re seeing U.S. growth has been consistent. We’re seeing the employment trend continues to be positive. You’re seeing people come back to the workforce, the kind of thing is going to be great for Walmart.”

For the full year, Walmart is expecting earnings to be in the range of $4.90 to $5.05. Previously the company had expected a range of $4.75 to $5.00.

Bernstein analyst Brandon Fletcher remains weary of the guidance and noted, “It takes a lot of work to get to the adjusted EPS, and we think it’s reasonable to assume there are other bad days in [Walmart’s] near future as they continue to clean up their int’l portfolio and eCommerce investments.”

He added, “Grocery and apparel showed strong growth, and costs were under control making it one of the strongest quarters for [Walmart]. While we are excited to see general growth in eCommerce, our small raise in guidance is due to this growth being indicative of a strong economy rather than [Walmart] fixing its core problems.”

Disclaimer: We have no position in Walmart Inc. (NYSE: WMT) and have not been compensated for this article.