Wal-Mart Stores Boosts Full-Year Profit Forecast

Wal-Mart Stores (NYSE: WMT) reported fiscal 2018 second-quarter results on Aug. 17. The retail colossus continues to enjoy strong growth in its e-commerce operations and improving performance in its stores, prompting management to raise its earnings guidance for the year ahead.

Wal-Mart Stores results: The raw numbers

What happened with Wal-Mart Stores this quarter?

Total revenue grew 2.1% to $123.4 billion, and 2.9% on a constant currency basis. U.S. comparable-store sales -- excluding the impact of fuel prices -- rose 1.8%, fueled by a 1.3% increase in traffic. Additionally, nine of Wal-Mart's 11 international markets enjoyed positive comp sales, helping Walmart International's net sales rise 1% (2.5% in constant currency), to $28.3 billion.

Wal-Mart's U.S. e-commerce business continued its torrid growth, with sales surging 60%, following a 63% jump in the first quarter. Gross merchandise volume soared 67%, as Wal-Mart expanded its online assortment of goods to more than 67 million products. Notably, e-commerce growth was primarily driven by higher organic sales through Walmart.com, which were further boosted by recent e-commerce acquisitions such as Bonobos.

"Our customers are responding to the improvements in stores and online, and our results reflect this," said CEO Doug McMillon in a press release. "We are moving faster and becoming more creative as we strive to make every day easier for busy families."

However, Wal-Mart's technology investments and its move to lower prices at many of its stores in order to drive sales weighed on profits. Gross margin fell 11 basis points, and operating income declined 3.2% (1.6% in constant currency), to $6 billion.

Fortunately, Wal-Mart continues to gush cash, to the tune of more than $11 billion in operating cash flow and nearly $7 billion in free cash so far in fiscal year 2018. In turn, the retail behemoth was able to return $3.8 billion to shareholders via dividends and stock buybacks in the second quarter.

Looking forward

Wal-Mart expects third-quarter comp sales growth (ex. fuel) of 1.5% to 2% for its U.S. locations and 1% to 1.5% for its Sam's Club stores. Earnings per share are projected to be between $0.90 and $0.98.

The company also boosted its fiscal 2018 full-year adjusted EPS guidance to $4.30 to $4.40, up from a previous forecast of $4.20 to $4.40.

"We're uniquely positioned to deliver the seamless, fast, innovative and exciting shopping experience our customers desire," McMillon said during Wal-Mart's earnings call. "We have a clear strategy that we're executing against and good momentum across the business."

10 stocks we like better than Wal-Mart StoresWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Wal-Mart Stores wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.