Upon reporting of their fiscal second-quarter earnings, shares in Walmart surged upwards in excess of 10 percent. Apparently, the earnings and sales report beat both estimates as well best comparable sales growth in ten years. This upshot is the result of boosts in grocery, apparel, and seasonal sales; and e-commerce sales are up 40 percent!
But it looks like Walmart is not the only retailer seeing a bump. The discount chain’s bullish report only mirrors upward momentum in July across all retailers, according to a government report. Indeed, US retail sales jumped a half percent (to more than six percent on the year), in July, following a 0.1 percent drop in June. Still, the overall US economy grew 4.1 percent in the second quarter, which is the best pace in at least four years.
In light of this news, Grant Thornton chief economist Diane Swonk comments, “There’s no question that the consumer is out spending. One of the things we saw in retail sales was even though we don’t have more wage growth, we have more wages. We have more paychecks. That critical mass is showing up and actually spending. We have very robust spending on discretionary items. They’re going out to dinner, and we know the Fourth of July holiday was one of the most traveled on record.”
Overall, US Walmart sales (open for at least one year) jumped 4.5 percent, which is nearly double the 2.4 percent that analysts had expected. For the quarter ending July 31 of this year, Walmart posted sales of $128 billion, which is a gain of 3.8 percent.
Analysts suspect that tax cuts are a big contributor of this uptick. For example, Bespoke co-founder Paul Hickey notes, “I think the tax cuts are certainly a factor. You just saw strong economic growth in the quarter. The U.S. economy is doing pretty well, and that’s going to be reflected in numbers like Walmart’s. It’s about time. Walmart is all over the country, it’s middle America. I think it’s a good representative of the consumer. I think we’re seeing U.S. growth has been consistent. We’re seeing the employment trend continues to be positive. You’re seeing people come back to the workforce, the kind of thing is going to be great for Walmart.”