Walmart's grocery business is booming

Gina Acosta
Executive Editor
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Walmart now offers curbside pickup of online grocery orders in 1,800 U.S. stores.

Walmart's grocery business is helping the retailer achieve stunning sales and revenue growth despite myriad competitive and operational pressures.

The retailer reported Thursday that its comparable sales grew 4.5% in the second quarter, the most in a decade. Meanwhile the company's e-commerce sales grew 40 percent, higher than the 33 percent growth in the previous quarter.

"Thanks to the hard work of our associates, we had a great quarter with strong results and momentum across the business. We’re pleased with how customers are responding to the way we're leveraging stores and eCommerce to make shopping faster and more convenient. We're continuing to aggressively roll out grocery pickup and delivery in the U.S., and we recently announced expanded omni-channel initiatives in China and Mexico. Customers have choices and we're making it easier than ever for them to choose Walmart," said Doug McMillon, President and CEO, Walmart.

Same store sales during the second quarter ended July 27 rose 4.5% excluding fuel. Strong comp sales were supported by traffic and ticket growth as each exceeded 2.0%. Grocery sales rose the most in nine years thanks to improved fresh-food offerings. Walmart's expansion of grocery delivery and curbside pickup contributed to same-store sales gains, Walmart said. The company now offers curbside pickup of online grocery orders in 1,800 U.S. stores, and Chief Financial Officer Brett Biggs said in an interview with Bloomberg that the service is bringing in new customers who hadn’t shopped at Walmart before. The company is on track to reach about 40% of the U.S. population by year-end with grocery delivery.

Walmart also raised its sales and earnings outlook for the full year, excluding any impact from its acquisition of Indian e-commerce company Flipkart, which it is still in the process of closing. The company is in the process of repositioning its international business portfolio and recently said it will sell a majority stake in its UK grocery chain Asda Group Ltd to J Sainsbury PLC. Recently, Walmart closed the transaction to divest of a majority stake in Walmart Brazil.

Total revenue was $128.0 billion, an increase of $4.7 billion, or 3.8%. Excluding currency, total revenue was $127.8 billion, an increase of $4.4 billion, or 3.6%.

Sam's Club comp sales increased 5%, the strongest growth in six years.

Net sales at Walmart International were $29.5 billion, an increase of 4.0%. Excluding currency, net sales were $29.2 billion, an increase of 3.1%. Comp sales were positive in the four largest markets.

Walmart today has more than 11,200 stores under 55 banners in 27 countries and e-commerce websites.