HIGH POINT — Two major retailers making the news this week have different perspectives on how the rest of the year might play out for its consumers.
Both Walmart and Home Depot, each considered bellwethers for consumer spending by many, reported second quarter earnings this week, focusing attention on what’s happening at retail during an unpredictable year.
In its Q2 FY25 earnings release, Walmart is reporting “strong growth in revenue and operating income,” adding that “globally, e-commerce penetration is higher across all segments.” In the earnings release, the company reports that it has raised its outlook for fiscal year 2025. For the third quarter, net sales are expected to grow 3.25% to 4.25% and operating income to grow 3% to 4.5% in constant currency. For the year, net sales are expected to grow 3.75% to 4.75% and adjusted operating income to grow 6.5% to 8% cc.
“Our team delivered another strong quarter,” stated Doug McMillon, president and CEO. “They work hard every day to help our customers and members save time and money. Each part of our business is growing: Store and club sales are up, e-commerce is compounding as we layer on pickup, and even faster growth in delivery as our speed improves. Our newer businesses such as marketplace, advertising and membership are also contributing, diversifying our profits and reinforcing the resilience of our business model.”
In its earnings release, Home Depot reported sales of $43.2 billion for the second quarter of fiscal 2024, an increase of 0.6% from the second quarter of fiscal 2023. Total sales include $1.3 billion from the recent acquisition of SRS Distribution Inc. (SRS), which represents approximately six weeks of sales in the quarter. Comparable sales for the second quarter of fiscal 2024 decreased 3.3%, and comparable sales in the U.S. decreased 3.6%.
Home Depot updated its fiscal 2024 guidance in the release, with 53 weeks of operating results, to reflect the performance in the first half of fiscal 2024 and include SRS:
Officials predict comparable sales to decline between 3% and 4% for the 52-week period compared with fiscal 2023. Comparable sales decline of 3% implies a consumer demand environment consistent with the first half of fiscal 2024. And while comparable sales for the company are not currently on the trajectory for the low end of the range, a 4% decline implies incremental pressure on consumer demand
“The underlying long-term fundamentals supporting home improvement demand are strong,” said Ted Decker, Home Depot chair, president and CEO. “During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects. However, the team continued to navigate this unique environment while executing at a high level.”