Retail giant Walmart was seeing big gains after the company revealed that it had the best sales in a decade.
The stock saw gains of over 10% after reporting fiscal second quarter results that beat on both the top and bottom line. Walmart also revealed that comparable sales growth was the best in a decade.
E-commerce sales saw a growth of 40% with sales being boosted by the buying or groceries, apparel and seasonal merchandise.
Walmart also said that stores open in the U.S. for at least 12 months had seen a rise of 4.5% compared to the 2.4% that analysts had expected. Sales for the second quarter ended July 31st reached $128 billion. This marked a growth of 3.8%.
U.S. retail sales jumped a half percent in July, or 6.4 percent annually, after seeing a 0.1 percent drop in June.
The U.S. economy in the second quarter, grew at 4.1 percent, the best pace in four years, according to data.
“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,” said Paul Hickey, the 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.”
According to Bespoke, the over 10% gap that Walmart saw after reporting earnings was the most positive gap open after earnings since 2001.
Looking ahead, Walmart has guided for full year earnings in the range of $4.90 to $5.05. Previously the company had expected a range of $4.75 to $5.00. The company also said that its investment in Flipkart, an Indian electronic commerce company based in Bengaluru, India, would lower full-year earnings by 25 to 30 cents per share.
Bernstein analyst Brandon Fletcher remarked, “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.”
“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.”