Walmart's strong global sales boosts quarterly results

Robust consumer spending in the US has propelled Walmart to exceed expectations in its second-quarter results and raise its forecasts. Notably, Walmart's international sector achieved its most impressive quarterly performance in several years.

The multinational retail giant's international arm, which operates across 19 countries, witnessed a substantial 13.3 per cent surge in sales during the second quarter. 

This achievement marks the division's strongest performance since at least 2016, as indicated by Refinitiv data. The international unit generated $27.6 billion in sales, constituting 17 per cent of the company's overall quarterly revenue. This figure surpassed market projections of $26.12 billion.

Canadian consumers more affected by rising interest rates

During a recent call, Walmart CEO Doug McMillon acknowledged that in Canada, consumers are feeling the impact of rising interest rates more acutely than their American counterparts due to shorter-term mortgages.

Walmart's Walmex in Mexico recorded a 10 per cent sales growth | Image credit: Unsplash

McMillon stated, "When you put all this together, we see families that are discerning about what they're spending on."

Mexico reported a 10 per cent increase in sales for Walmart's subsidiary Walmex, while in India, the majority-owned Flipkart business experienced double-digit sales growth. Additionally, PhonePe, another Walmart venture, processed over 5 billion transactions within a single month.

Noteworthy is the exceptional performance in China, where sales surged by 22 per cent, a notable feat given the ongoing economic challenges faced by the world's second-largest economy. 

This success is particularly striking amid cautionary statements from global giants like Unilever and Caterpillar, who have expressed concerns about diminishing earnings in China.

Revamping Sam’s Club stores helped

Judith McKenna, the CEO of Walmart International, who assumed leadership in 2018, attributed the strong performance in China to the recent revamp of Sam's Club stores. These updated outlets feature uncluttered displays, enhanced lighting, and improved signage, resonating well with Chinese customers.

Image credit: Unsplash

In April, McKenna articulated the significance of China and India in Walmart's strategy to double its gross merchandise volume in foreign markets to $200 billion within five years.

As part of organisational changes, McKenna is set to retire on January 31, 2024, and will be succeeded by Kathryn McLay, the current head of Walmart's Sam's Club business, starting in September.

"Walmart's international business continues to perform well. Its CEO, Judith McKenna, is leaving on a high note," commented Jason Benowitz, Senior Portfolio Manager at CI Roosevelt.

(With Reuters inputs)