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Walmart may have found the key to success in a lukewarm economy: offering consumers lower prices and greater choice (with a bit of help from AI).
The retailer posted strong earnings for Q2, reporting 4.8% revenue growth year over year. It saw same-store sales growth of 4.2% year overyear in the US, during a period when other retailers saw average comp growth of 2.8%. After the earnings report came out, Walmart overtook Costco to become the best-performing retailer on the S&P 500, according to the Wall Street Journal.
Walmart also raised its guidance for the fiscal year, bumping up its estimates for net sales from 3%–4% to 3.75%–4.75%, and increasing its EPS guidance from $2.23–$2.37 to $2.35–$2.43.
The retail giant hasn’t seen “any additional fraying of consumer health,” its CFO, John David Rainey, said during an earnings call. “Customers continue to be discerning and choiceful, looking for value to maximize their budgets, while leaning into seasonal celebrations,” he said.
Lowering prices appears to have paid off for Walmart. The chain made more than 7,200 price cuts in the US, CEO Doug McMillon said, noting that “for the quarter, both Walmart US and Sam’s Club US were slightly deflationary overall.”
Watch out, Amazon: Walmart’s US e-commerce business rose 22% in the quarter, and AI’s a big reason why. The company used generative AI to “populate the attributes and the characteristics of hundreds of millions of items” on its site, John Furner, president and CEO of Walmart US, said. It would have taken 100 times longer to do so manually, he estimated.
Customers seem to have responded well to the increased choices available on Walmart’s website. For the first time in 11 quarters, its general merchandise sales were flat rather than declining. Rainey attributed this improvement partly to the expansion in the assortment of items Walmart sells. And AI can suggest items to consumers on Walmart’s site, leading to more impulse purchases, McMillon said.
Walmart’s also improved its delivery capabilities recently, expanding to 15 million more homes and making more “convenient, on-demand deliveries,” in some cases in less than three hours, Furner said. AI’s helping out here, as well: "It can show employees images of products customers have purchased to expedite delivery.