Exceeding market expectations, Walmart's second-quarter revenue reached $152.9 billion!

Walmart's second-quarter results exceeded market expectations, but inventory issues need to be resolved urgently.

As one of the largest e-commerce platforms in the United States, Walmart has always been seen as a strong rival to Amazon. With Amazon's better performance in the second quarter, the industry's attention to Walmart has further increased.

Not long ago, the market predicted that Walmart's second-quarter performance might fall short of expectations again, but judging from the financial report data released by the company yesterday, its development is still strong.

Second quarter revenue of $152.9 billion, inventory issues remain a threat

On August 16, Walmart announced its second quarter performance, which exceeded market expectations. It is reported that Walmart's total revenue in the second quarter of this year reached 152.9 billion US dollars, an increase of 8.4% year-on-year, higher than the market estimate of 150.99 billion US dollars.

Among them, Walmart's US revenue has increased by 6.5% and 11.7% in the past two years. The US e-commerce business has increased by 12% and 18% in the past two years. Walmart's net sales in the Chinese market increased by 15.9% in the second quarter , and its e-commerce net sales increased by 77%, with a two-year cumulative growth rate of 152%.

Walmart's international net sales in the second quarter were $24.4 billion, up 5.7% year-on-year. Exchange rate fluctuations had a certain impact on its performance growth. Its global advertising business grew by nearly 30%. Consolidated operating income was $6.9 billion, down 6.8% year-on-year. Walmart Sam's Club store sales revenue increased by 9.5%, membership income increased by 8.9%, and the number of members reached a record high.

Walmart said it still expects Walmart's U.S. sales to grow by about 3% in the second half of this year and about 4% for the full year, with revenue expected to decline. However, due to rising costs such as inventory and procurement and reduced revenue growth, Walmart's cash flow in the first half of the year decreased by $5.7 billion compared with the same period last year.

Although the performance exceeded market expectations, its ongoing inventory problems remain a major threat.

Cancelling billions of dollars in orders to ease inventory pressure

Like other retailers in the United States, Walmart is also struggling with inventory levels due to inflation and supply chain delays . The reason is that Walmart said that delayed orders from the first and second quarters of this year have only recently arrived, increasing existing orders for this quarter. Most importantly, consumers' spending has shifted significantly, causing the company to overspend in categories such as clothing.

John Furner, CEO and president of Walmart USA, said that these situations will improve in the second half of the year. As for the problem of excess inventory, it will take several quarters to solve it. He also added that it is extremely urgent to solve the problem of excess clothing at present . Because some of these products are seasonal, as the third quarter begins, the relevance of these products to consumers will decrease, and the order volume will decrease accordingly . This means that if Walmart does not deal with such inventory in time, its sales revenue will be further affected.

In a conference call announcing second-quarter results yesterday , Walmart Chief Financial Officer John Rainey said the company has now canceled billions of dollars in orders to deal with the inventory pileup that has accumulated over the past few quarters. In addition to canceling user orders, Walmart has also taken price cuts on categories with lower sales .

Walmart is one of the largest retailers in the United States. Its revenue performance is not only regarded as an indicator of its operating conditions, but also as an indicator of the overall strength of the U.S. economy. In the first half of this year, the overall economic development of the United States was not optimistic, and the "high fever" of U.S. inflation also caused consumer confidence to drop to a historic low.

In response to changes in consumer shopping behavior, Walmart has taken layoffs and restructuring measures to adjust its business structure. It is reported that in early August, about 200 jobs were cut at Walmart, involving various departments including sales, global technology and real estate teams.

A Walmart spokesperson said that as the company adjusts its structure, some positions have been eliminated, but the company is further investing in key areas such as e-commerce, technology, health and wellness, supply chain and advertising sales, and creating new positions to provide more and better services to consumers, suppliers and the business community.

At the same time, Walmart also cut prices on some products. As early as July , Walmart said that increasingly severe inflation and rising fuel and food prices are prompting consumers to cut other spending, forcing Walmart to lower prices on some non-essential items, such as clothing, electronics and household items .

Walmart's price cuts seem to have achieved some results in boosting product sales. In a conference call, Walmart said consumers responded well to the price cuts. Although Walmart expects earnings to continue to decline in the second half of the year in its latest financial report, the decline is smaller than previously expected.

Back-to-school season is strong, sending positive signals

Walmart CEO Doug McMillon said he was pleased to see more consumers choosing Walmart during this period of severe inflation . Walmart's earnings data showed that consumer spending remained strong despite the possibility of a recession in the coming months .

The United States is currently in the back-to-school shopping season. Walmart pointed out that consumers' performance during the back-to-school season is also very strong , which may be affected by the continued increase in employment rates and wage levels. This is also a good signal for the development of the US retail industry in the coming months.

According to the National Retail Federation, the total back-to-school spending in the United States during the back-to-school shopping season may reach $110.8 billion, a record high. Among them, school supplies, clothing and accessories, shoes, electronic products and other categories are hot-selling products among back-to-school shopping consumers.

In terms of shopping methods, the shopping channels chosen by back-to-school consumers mainly include online shopping, department stores, discount stores, etc. Among them, the proportion of households choosing online shopping is the highest, reaching 50%, followed by department stores and discount stores.

But as inflation continues to mount in the U.S., price and value are becoming key drivers of consumer purchasing decisions, and major retailers are gearing up to compete for back-to-school shoppers.

Most of these retailers choose to start with product prices, and Walmart is no exception. Ana Arguello, vice president of stationery, said, "We have been working hard to provide consumers with popular back-to-school products at the low prices they expect."

For cross-border sellers, the back-to-school season is also a great opportunity to increase product sales. In the current economic environment in the United States, sellers should pay more attention to the shopping needs of American consumers, provide them with more high-quality and cost-effective products, and win the tough battle of the back-to-school season!

Walmart

Q2. Financial report