Walmart Inc. (WMT) 2025 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Sales and Profit Growth: Walmart reported strong sales growth and even stronger profit growth, exceeding expectations.
• Broad-Based Strength: The company saw broad-based strength across its business, with notable performance outside the U.S., particularly in Walmex and India with Flipkart and PhonePe.
• E-commerce and Membership Growth: E-commerce sales grew about 20% across segments, with Walmart Plus memberships up double-digits and Sam's Club U.S. achieving a record high member count.
• Automation and AI Implementation: Walmart is leveraging Generative AI to improve customer, member, and associate experiences, including improving product catalog quality and e-commerce search capabilities.
• International Business Performance: International markets showed strong sales growth, particularly in Walmex, China, and Flipkart, with private brand penetration increasing across multiple markets.

Pessimistic Highlights

• Expense Deleverage: The company experienced expense deleverage across segments, largely related to increased marketing and higher variable pay expenses tied to above-planned performance.
• Economic and Geopolitical Uncertainty: Walmart acknowledges the uncertain economic and geopolitical backdrop, maintaining a cautious outlook for the second half of the fiscal year.

Company Outlook

• Raised Full-Year Guidance: Based on strong first-half results, Walmart raised its full-year guidance for FY ‘25, expecting sales growth of 3.75% to 4.75% and operating income growth of 6.5% to 8%.
• Continued Focus on Value and Convenience: Walmart emphasizes its commitment to providing value and convenience to customers and members, expecting sustained structural improvements and incremental margins in the second half.
• Investment in Prices and Technology: The company plans to continue investing in prices for customers, wages and benefits for associates, and leading-edge technologies to power growth.

Q & A Highlights

• Q: Can you frame or quantify how you have factored in things like the election and other distracting events into your guidance for 3Q and 4Q? (Michael Lasser, UBS)

  A: John David Rainey mentioned that elections are a known event and, despite the uncertain economic backdrop, Walmart's business is executing well and gaining share. The outlook remains measured but optimistic.

• Q: What does your guidance assume in terms of your outlook on the consumer, and what do you see happening within the general merchandise category? (Oliver Chen, TD Cowen)

  A: John David Rainey explained that the outlook for the consumer is consistent with recent trends, with no significant change expected. General merchandise showed positive inflection, driven by Walmart's expanding assortment and relevance to customers.

• Q: Following the gross margin expansion in the first-half, how are you thinking about gross margin in the second-half? (Paul Lejuez, Citigroup)

  A: John David Rainey clarified that Walmart is not raising prices but lowering them, focusing on business mix and geography for margin improvement. Kath McLay added that events like Big Billion Days in India impact profit profiles but expressed optimism about international results.

• Q: What kind of holiday is Walmart planning for this year in the U.S. and globally? (Robbie Ohms, Bank of America)

  A: Doug McMillon expressed optimism for a great holiday season, highlighting Walmart's history of dealing with volatility and the positive start to back-to-school sales as indicators of a strong holiday performance ahead.