Walmart Posts Slowest US Sales Growth in Six Years

Summary

Mizuho senior equity analyst David Bellinger discusses Walmart's second-quarter US same-store sales growth of 2.6%, the slowest in more than six years. He attributes the disappointment to pharmacy drug-price cuts, high expectations, leadership disruption, and some competitive factors, while arguing the consumer stress is not widespread. Longer term, he sees Walmart as a share taker in grocery and general merchandise.

• Walmart Q2 US same-store sales ex fuel rose 2.6%, the slowest in six years.
• Inflation Reduction Act drug-price cuts created about a 125 basis point same-store sales headwind.
• High valuation leaves Walmart little room for execution misses.
• Leadership changes, Target/Amazon grocery competition, and low-income consumer stress were cited as minor factors.
• Costco July sales and Five Below double-digit comps suggest not a widespread consumer slowdown.
• Bellinger sees Walmart as a bigger share taker in grocery and general merchandise longer term.