Shares of Home Depot (NYSE: HD) and Walmart (NYSE: WMT) are trading higher on Tuesday after reporting better-than-expected Q2 2022 earnings.
How Did HD Do in Q2?
The company reported Q2 adjusted earnings per share (EPS) of $5.05, topping the consensus estimates of $4.94 per share. Net income climbed 7.6% year-over-year to $5.17 billion, while net sales rose 6.5% from the year-ago period, marking the retailer’s highest-ever quarterly sales performance. Sales per retail square foot were up 5.7% from the same period last year.
Revenue came in at $43.79 billion, above the analyst consensus of $43.36 billion. Same-store sales rose 5.8% year-over-year, while analysts were expecting a 4.9% growth, as per FactSet.
Home Depot reported its total customer transactions fell to 467.4 million from 481.7 million in the year-ago quarter, while average ticket rose 9% to $90.02 from $82.48 as sales were likely boosted by professional contractors.
Going forward, the home improvement retail company expects total sales for fiscal 2022 to rise roughly 3% year-over-year.
“Our team has done a fantastic job serving our customers while continuing to navigate a challenging and dynamic environment,” said Ted Decker, CEO of Home Depot.
Shares of Home Depot are up 2.5% on Tuesday.
Walmart Also Beats
Meanwhile, shares of Walmart (NYSE: WMT) surged almost 5% in premarket trading after the retail giant beat estimates for EPS and revenue in its fiscal Q2 2023.
The company reported a second-quarter adjusted EPS of $1.77, topping the consensus projection of $1.62 per share. Net income in the quarter surged to $5.15 billion, or $1.88 per share, up from $4.28 billion, or $1.52 last year.
Walmart’s same-store sales in the U.S. rose 6.5% year-over-year in the second quarter, excluding fuel, topping analyst expectations of 5.9% growth.
Walmart’s e-commerce sales soared 12% from the year-ago period, and 18% relative to the same quarter two years ago.
The retailer also reported double-digit comparable sales growth in grocery, while the health and wellness category saw high single-digit growth. General merchandise sales fell mid-single-digits due to weaker demand for electronic devices, apparel, and home products.
Walmart’s inventory levels in the U.S. grew 25.6% year-over-year as a result of higher costs of goods and increased levels of general merchandise.
While Walmart’s report exceeded expectations, it also echoed the retailer’s profit warning last month when it said shoppers were spending less on merchandise and more on essentials due to inflationary pressures.
The company said it expects this trend to continue going forward and reaffirmed its forecast for the second half of the year. Walmart expects same-store sales in the U.S. to grow roughly 3% in H2 2023, or around 4% for the full fiscal year. It expects adjusted EPS to slump between 9% and 11% for the full year.
“We expect inflation to continue to influence the choices that families make and we’re adjusting to that reality so we can help them more,” McMillon told analysts on a conference call.
However, inflation also boosted a part of Walmart’s sales as it is fueling higher prices of food and some other items. The retailer’s CFO John David Rainey said the company’s reputation as a discounter continues to attract middle and high-income buyers, with roughly 75% of its market share gains in food coming from customers with annual household incomes of over $100,000.
On the other hand, low-income shoppers are trading down in terms of both quality and quantity and buying more cheaper food items like canned food instead of meats and beef.
“Clearly, they’re stressed from higher gas prices, higher food prices and even housing,” he said.
Summary
Home Depot and Walmart are trading higher after reporting better-than-expected earnings.
