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What’s happening: Shares of Walmart gained on Thursday, after the company reported results for the second quarter.
What happened: The big box retailer reported stronger-than-expected sales for its latest quarter on Thursday.
Walmart also raised its sales and profit projections for a second time this year, sending the company’s shares to a record high during the session.
How were the results: The Bentonville, Arkansas-based company reported single-digit growth in sales for the second quarter.
Why it matters: Concerns around inflation in the US has forced customers to choose inexpensive essential items, benefitting retailers like Walmart.
The world’s largest retailer by sales reported global ecommerce sales growth of 21%, while its global advertising business grew by 26%.
Walmart’s US same-store sales, excluding fuel, rose 4.2% year-over-year, beating market expectations of 3.3%, while same-store sales at Sam’s Club gained 5.2%.
The company also reported a 16% rise in memberships and other income in the second quarter.
Its gross margin expanded by 43 basis points (bps) in the quarter, boosted by gains across the Walmart US and Walmart International segments.
“Our newer businesses like marketplace, advertising, and membership, are also contributing, diversifying our profits and reinforcing the resilience of our business model,” CEO Doug McMillon said.
Management guided to adjusted earnings of 51 cents to 52 cents per share for the third quarter, slightly below market estimates of 55 cents per share. They also projected sales of $164.58 billion to $166.17 billion.
For the full fiscal year, management raised their adjusted earnings forecast to $2.35-$2.43 per share, from $2.23-$2.37 per share. They also raised their guidance for net sales (at constant currency) growth for the year to 3.75%-4.75%, from 3.0%-4.0%.
How shares responded: Walmart’s shares climbed 6.6% to close at $73.18 on Thursday, after surging to a record high of $74.44 earlier in the session. The stock has gained around 38% year to date.
What to watch: Investors will continue monitoring overall inflation levels and consumer spending in the US. Markets will also watch the progress in Walmart’s newer businesses.
Context: The CAD/USD forex pair edged lower on Thursday, as investors monitored the latest economic reports.
Details: Data released on Thursday showed wholesale sales in Canada declining 0.6% in June, after a 0.8% contraction in the earlier month. Car registrations in the country fell to 168,001 units in June, after declining to 184,711 units in the prior month.
However, Canada’s unemployment rate came in unchanged at 6.4%, remaining at the highest level in more than two and a half years and signalling continued weakness in the country’s labour market.
Ongoing contractions in the manufacturing sector also fuelled speculations of continued interest rate cuts by the Bank of Canada.
Strength in the US dollar also exerted pressure on the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.4% to 102.98 on Thursday.
Meanwhile, an upturn in the price of crude oil, one of Canada’s major exports, limited the overall losses for the loonie. WTI crude oil prices jumped $1.18 to close at $78.16 per barrel on Thursday.
The CAD/USD forex pair slipped more than 0.1% to 1.3734 on Thursday. The S&P/TSX Composite Index jumped 1.20% to close at 23,032.72.
What to watch: Investors await the release of data on Canada’s housing starts, foreign investment in securities and manufacturing sales today. Housing starts in Canada, which declined by 9% to 241,672 units in June, are expected to increase to 245,000 in July.
Analysts expect manufacturing sales in Canada to decline 2.6% in June, after a 0.4% gain in the prior month.
Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.80%, 1.66%, 1,23% and 1.15%, respectively.
The White House said the US will soon provide further security packages to Ukraine for the ongoing war with Russia. The news sent the safe-haven US dollar index slightly lower in forex trading this morning.
Singapore’s non-oil domestic exports jumped by 15.7% year-over-year in July, following a decline of 8.8% in the prior month. The latest reading also topped market expectations of 1.5%, lensing support to the SGD/USD forex pair.
New Zealand’s BusinessNZ performance of manufacturing index jumped to 44 in July, from 41.1 in the earlier month, sending the NZD/USD pair higher in forex trading this morning.
Colombia’s leading economic indicator declined by 1.12% year-over-year in June, compared to a 2.45% gain in the previous month, which exerted pressure on the COP/USD forex pair.
Israel’s annual inflation rate accelerated to 3.2% in July, from 2.9% in June. The inflation rate hitting the highest level since November 2023 sent the ILS/USD pair lower in forex trading this morning.
UK’s retail sales, Eurozone’s balance of trade, India’s foreign exchange reserves, Brazil’s IBC-Br economic activity index, US building permits, housing starts, University of Michigan consumer sentiment, Baker Hughes crude oil rigs and Baker Hughes total rigs, as well as Turkey’s total motor vehicles production.
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