Walmart raises earnings forecast, but drug price declines hit hard
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Walmart raised its sales and earnings forecast Thursday, powered by a strong performance in the company's online business, although declines in drug prices hurt sales.
Why it matters: As the world's largest retailer, Walmart is a bellwether for the economy and the health of the consumer.
Driving the news: The chain recorded a 5.9% increase in revenue, to $187.9 billion, compared with a year earlier, edging S&P Capital IQ expectations of $186.8 billion.
- That included a 2.6% increase in comparable sales at Walmart U.S. stores when excluding fuel.
- It also included a 24% rise in U.S. e-commerce sales, which drew strength from store-fulfilled delivery, advertising and online marketplace sales.
- Earnings per share totaled 80 cents, beating S&P Capital IQ expectations of 74 cents.
- The company cited merchandising strength in grocery sales, personal care items, beauty, pet supplies, toys and fashion.
Zoom in: Walmart raised its fiscal year net sales outlook from a range of 3.5%-4.5% to a range of 4%-5%.
- It also increased its adjusted earnings-per-share outlook from a range of $2.75-$2.85 to a range of $2.80-$2.87.
What they're saying: "Our multi-year growth in eCommerce is evidence that customers are choosing Walmart because we deliver price, speed, and convenience across a broad assortment," Walmart CEO John Furner said in a statement.
Threat level: Drug price declines — caused in part by the federal government's Medicare prescription drug regulation — undermined the retailer's U.S. sales.
- The company cited GLP-1 drug prices as a particular factor, "as script growth was more than offset by price-mix headwinds."
- America is experiencing its biggest prescription drug price deflation in generations, Axios' Courtenay Brown reported Monday.
What to watch: Walmart said it is reinvesting tariff refunds in prices.
