Walmart raised its sales and earnings outlook for the year, helped by strong growth in its online business. However, a decline in drug prices weighed on US sales and sent the retailer’s shares down about 8% in the trading.
The world’s largest retailer reported a 5.9% rise in revenue to $187.9 billion, slightly above S&P Capital IQ estimates of $186.8 billion. Walmart US comparable sales, excluding fuel, rose 2.6% from a year earlier. US e-commerce sales were up 24%, supported by store-fulfilled deliveries, advertising and marketplace sales.
Earnings per share came in at 80 cents, beating the 74 cents expected by S&P Capital IQ.
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The company said sales benefited from strength across grocery, personal care, beauty, pet supplies, toys and fashion.
Walmart also raised its fiscal-year net sales growth forecast to 4%-5%, from its earlier estimate of 3.5%-4.5%. Its adjusted earnings-per-share outlook was increased to $2.80-$2.87, compared with the previous range of $2.75-$2.85.
“Our multi-year growth in eCommerce is evidence that customers are choosing Walmart because we deliver price, speed, and convenience across a broad assortment,” Walmart CEO John Furner said in a statement.
Despite the stronger overall performance, falling drug prices emerged as a concern for investors. Walmart said the decline was partly linked to the federal government’s Medicare prescription drug regulations.
The company specifically pointed to lower prices for GLP-1 drugs, saying prescription growth was “more than offset by price-mix headwinds.”
The pressure comes as the US prescription drug market experiences significant price deflation. According to Axios, drug prices are seeing their biggest decline in generations.
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For Walmart, the impact of lower drug prices is significant given the size of its pharmacy business and its broader exposure to US consumers.
Investors will also be watching the company’s response to tariffs. Walmart said it is reinvesting tariff refunds in lower prices, as it seeks to maintain its value proposition for consumers.
While stronger e-commerce sales and an improved earnings outlook point to continued consumer demand, the sharp pre-market decline in Walmart shares shows that investors remain concerned about pressure on margins and drug-related sales.
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