Groceries continue to be the saving grace for Walmart.
Same-store food sales for the quarter that ended July 31 soared to the mid-teens, while Walmart’s overall same-store sales climbed 6.5%, Walmart executives announced early Tuesday.
Walmart’s grocery sales mix increased nearly 300 basis points, while general merchandise sales decreased more than 350 basis points, the company said. That sales shift led to further markdowns for the retailer, particularly in apparel and electronics.
Inflationary pressures, though, caused Walmart’s operating income to fall 6.8%, to $6.9 billion.
“We didn’t expect food and fuel inflation to accelerate to the levels we saw in Q2,” Walmart CFO John David Rainey told analysts.
Just a few weeks ago, Walmart slashed its profit outlook for the fiscal year. Not long after, the Bentonville, Ark.-based retail giant reportedly laid off hundreds of corporate employees to better position the company for revenue growth.
“The second quarter finished stronger than we anticipated,” CEO Doug McMillon said. “We expect inflation to continue to influence the choices families make.”
Walmart’s membership-based Sam’s Club also reported a strong quarter, with same-store sales up 10%. At Sam’s Club, transactions increased 9.8% and e-commerce sales climbed 25%.
Sam’s Club membership income was up 9% during the quarter, or 17.2% on a two-year basis, adding more new members than any in recent memory, Walmart executives said.
Walmart’s same-store sales growth was largely driven by higher prices, with transactions growing 1% and average ticket increasing 5.5%.
Walmart said it has been working to improve its supply chain, rectifying “pockets of out of stocks” it suffered through during this time last year.
“Baby formula is now improving,” Rainey said.
On a two-year, stacked basis, Walmart’s same-store sales increased 11.7% during the quarter.
The retailer has been steadily growing its digital sales, which rose 12% during the quarter, or 18% on a two-year stack.
Walmart’s total revenue for the second quarter was $152.9, an increase of 8.4% from the year before.
For the third quarter, Walmart is anticipating U.S. same-store sales growth of about 3%, with an operating income decline of 8% to 10%.