Despite COVID-19 Delta variant fears beginning to weigh on consumer confidence and spending plans, the world's largest retailer Walmart (WMT) says consumer behavior remains stable.
"We are not seeing a major shift in consumer behaviors at this point," Walmart CFO Brett Biggs told Yahoo Finance when asked about current consumer trends. Biggs said the drivers of consumer spending in recent quarters — a high savings rate and rebounding jobs market — remain intact and are helping to fuel Walmart's sales.
Biggs added that the back-to-school shopping season has started "strong" as shoppers scoop up the school supplies they didn't need last year amid remote learning.
Indeed Walmart has the numbers to support its view that shoppers are hanging in there amidst the spread of the Delta variant.
Walmart said Tuesday that second quarter U.S. same-store sales rose 5.2% compared to forecasts of growth of 3.12%. On a two-year stacked comparison, U.S. comp sales grew 14.5%. Operating profit for the division rose at a faster pace than sales (good sign) — 10.6% increase in profits vs. a 2.4% improvement for sales.
Walmart said July was the strongest performing month for its U.S. business. Sales increased in all merchandise departments for Walmart's U.S. outfit: grocery, health and wellness, and general merchandise.
Meanwhile, the mostly U.S. focused Sam's Club business saw same-store sales rise 7.7%. All lines of business notched sales gains, save for tech equipment (reflective of consumers stocking up a year ago as the pandemic pushed people to work from home).
Walmart shares rose 1% to $151.44 in Tuesday's session.
The company's optimism on the consumer came through in the third quarter and full year outlooks.
Walmart sees third quarter earnings of $1.30 to $1.40 a share, ahead of estimates for $1.31 a share. For the full year, Walmart estimates earnings of $6.20 to $6.35. Analysts had forecast $6.02 a share.
"Walmart's momentum appears strong across segments," Morgan Stanley analyst Simeon Gutman wrote in a note to clients. The analyst maintained an Overweight rating on Walmart's stock with a $164 price target.
Yahoo Finance's Julia LaRoche contributed to this story.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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