Dive Brief:
- Walmart’s U.S. comparable-store sales excluding fuel rose 4.2% during its second quarter of fiscal year 2025 as the retailer saw strength in transaction counts and unit volumes online and in-store.
- Walmart’s U.S. business saw mid-single-digit growth in grocery — with fresh foods leading the way — and a 22% increase in e-commerce sales.
- Delivery and pickup sales are growing faster than in-store or club sales, Walmart President and CEO Doug McMillon told investors on a Thursday morning earnings call.
Dive Insight:
Grocery continues to drive Walmart’s growth as price-sensitive shoppers turn to the retailer to fill their fridges and pantries. In Q2, the company’s grocery and health and wellness sales outgrew its general merchandise sales.
“Food continues to be strong, and it's encouraging to see improvements in general merchandise,” McMillon told investors.
In the U.S., the retailer’s prices overall were slightly deflationary while food prices were slightly inflated at the end of Q2, but down 30 basis points compared to the prior quarter, McMillon said.
“In the context of a food sector in which inflation is moderating and where the gains from shopper switching are weakening, this is a solid performance which is testament to Walmart’s superior execution,” Neil Saunders, managing director of GlobalData’s retail division, wrote in emailed comments.
Walmart’s Q2 marked a rebound in comp sales growth
On the e-commerce front, Walmart is leveraging its massive store fleet for fulfillment, growing its automation capabilities and using generative AI to fuel online sales growth, executives said. The proximity of stores to customers enables faster delivery times. Store-fulfilled delivery was up about 50% in Q2, with many customers choosing faster speeds like delivery in under one hour or three hours, Walmart CFO John David Rainey told investors.
More than 45% of Walmart’s U.S. e-commerce fulfillment center volume is now automated, and about 1,800 stores receive some level of freight from 15 regional distribution centers in varying stages of automation implementation, allowing supply chain teams to process more units, Rainey said.
McMillon said Walmart’s broad assortment of items and services, its low prices and enjoyable shopping experience have driven sales.
“Value matters to everyone, whether you're above or below $100,000 in income,” McMillon said. “We do see behavior differences in the lower income levels — more focus on opening price points. … And as it relates to higher income people, they can buy more discretionary goods, and they can pay more for convenience.”
The retailer continues to see share gains across income cohorts, including upper-income households, executives told investors.
“I think the Walmart+ membership, delivery, the things we're doing with remodels — all these things are coming together to give us a shot at continuing to have growth with higher income levels regardless of what happens in the economy,” McMillon said.
While there is debate on how well Walmart will retain higher-income shoppers as inflation eases, GlobalData is optimistic that that customer cohort will stick around, Saunders wrote.
“Very few higher income consumers are shopping at Walmart with gritted teeth. There will, naturally, be some churn; but this is the normal state of affairs for grocery and is something Walmart can manage,” Saunders wrote, adding that the retailer’s grocery enhancements, including more innovative DTC brands and its new Bettergoods private label, will play a role in customer retention.
