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Q2 Earnings: Walmart Beats Expectations, Home Depot Ticks Up, Lowe’s Stays Flat

Walmart adjusts its dire earnings outlook for 2023 after bringing in strong second quarter results

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Walmart on Tuesday released its Q2 earnings, reporting that revenues for the quarter ending July 31 were $152.9 billion, up 8.4 percent from a year ago. Its comparable store sales grew 6.5 percent.

Walmart reported a Q2 net income of $5.15 billion compared to last year’s $4.36 billion.

Beating analysts’ estimates, the company maintains its outlook for the remainder of the year. Walmart now anticipates the year ending with a moderate drop in profits, but less than its previous dire estimate. Inflation is seen as having boosted sales at the big box merchant, as the company notes it is seeing more middle- and higher-income shoppers. In particular, sales were driven by customers turning to the store’s lower-priced foods and consumables.

“We’re pleased to see more customers choosing Walmart during this inflationary period, and we’re working hard to support them as they prioritize their spending,” Doug McMillon, President and CEO, Walmart says in the earnings release.

The company delivered strong top-line growth globally, with sales up nearly 10 percent, including double-digit comps in the three largest markets of Mexico, Canada and China. Walmart International net sales were $24.4 billion, an increase of $1.3 billion.

While economic stresses on consumers have driven food and consumables sales, caution on discretionary spending has hit the retailer’s clothing, electronics and other non-essential goods. During the earnings call, CFO John David Rainey addressed Walmart recently cancelling orders for billions in non-essentials.

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In its Q2 earnings released Tuesday, Home Depot reported sales revenue of $43.8 billion — an increase of $2.7 billion from Q2 2021 — just edging past analysts’ estimates of $43.4 billion. The rise in profits come from a strong home improvement market and inflation-bound higher prices, despite a reported drop in sales transactions.

Home Depot’s stock rose 5 percent in trading following release of the company’s Q2 report. Net earnings for the second quarter of fiscal 2022 were $5.2 billion compared to $4.8 billion in the prior year.

“In the second quarter, we delivered the highest quarterly sales and earnings in our company’s history,” Ted Decker, Home Depot CEO and President, says in the earnings release. “Our performance reflects continued strength in demand for home improvement projects.”

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Lowe’s released its Q2 earnings, with the home improvement retailer reporting more mixed results than Walmart and Home Depot. Comparable same-store sales increased 0.2 percent for the second quarter, but the home improvement business saw quarterly revenue slip 0.34% to $27.476 billion, missing some analysts’ estimates by a fair margin. Total transactions also fell in Q2, but inflation resulted in higher ticket revenue.

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Lowe’s net earnings remained essentially flat at $3 billion, but in line with prior-year results. The Mooresville, N.C. retailer reports its DIY sales were impacted by the shortened spring and lower demand in certain discretionary categories — in particular, seasonal items.

Marvin R. Ellison, Lowe’s Chairman, President and CEO, notes in the release: “Despite continued macro uncertainty, we remain confident in the long-term strength of the home improvement market and our ability to take share.”

During the quarter, the company repurchased approximately 21.6 million shares for $4 billion, and it paid $524 million in dividends.

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