Walmart has limited some gun sales over the years after mass shootings but avoided halting them altogether (Frederic J. BROWN)

New York (AFP) – Walmart lifted its full-year profit forecast Thursday after better-than-expected results on solid US consumer spending, communicating the company’s confidence that earnings won’t be significantly dented by trade tariffs.

The world’s biggest retailer, releasing second-quarter results amid rising fears of a US recession, described the consumer environment in America as in “relatively good shape” as the company notched another quarter of growth in US comparable sales, a closely-watched benchmark, jolting shares higher on Wall Street.

Walmart said full-year earnings per share will range from a slight decrease to a slight increase from last year, an improvement on the original outlook for a decline in the low single-digit percentage range. 

The company attributed the shift to a better-than-expected first half of the year.

“Customers are responding to the improvements we’re making, the productivity loop is working, and we’re gaining market share,” said Chief Executive Doug McMillon.

Net income was $3.6 billion, up from an $861 million loss in the year-ago period, when one-time costs related to its Brazil business dented results.

Revenues rose 1.8 percent to $130.4 billion.

McMillon said Walmart had boosted its competitive position in several categories, including food, health and wellness and toys, attributing the gains to heavy investments in e-commerce and smartphone applications that have strengthened ties to American households.

Walmart has been dueling with Amazon on faster home-delivery programs and in June unveiled a new venture to stock goods in customers’ refrigerators in three American cities. 

Analysts view the investments as necessary, but they have hit the company’s profit margins.

The retail giant has avoided specifics on how it is responding to tariffs on individual items.

The company’s projections incorporate the latest US tariff plans, including Tuesday’s announcement by US President Donald Trump of a delay on a fourth round of levies on Chinese goods that spared cellphones and many toys, but still hit many consumer categories including apparel and televisions.

The fourth round of tariffs, some of which go into effect on September 1, “affects a larger part of our assortment than the prior tariffs,” Chief Financial Officer Brett Biggs said in a statement.

He added that the company “has been able to thoughtfully manage pricing and margins with both our customers and shareholders in mind.”

– Mitigating tariff hit –

Biggs said that the company works with suppliers and tweaks its products in response to tariffs.

“You look at other places to source — some of that can be done, some of it can’t,” Biggs told reporters on a conference call. 

Walmart’s wide assortment of goods means it may raise prices on some products and not on others because of tariffs and “that gives us an advantage that some other retailers don’t have,” he said. 

Analyst Neil Saunders of GlobalData Retail said the results show “Walmart will be a retail winner, even if external factors start to deteriorate.” 

But Saunders cautioned that the retail giant still needs to boost the profitability of its e-commerce business, adding that results should improve as customers become more familiar with the offerings and boost their purchases. 

Gun control advocates have called on Walmart to end firearms sales after a gunman who posted an anti-Hispanic manifesto killed 22 people in an attack at a Walmart in El Paso, Texas.

McMillon defended the company’s decision to keep selling some guns as a “common sense” approach, noting that the chain had halted sales of military-style weapons in 2015 and raised the age limit to purchase a firearm to 21 in 2018 after an attack on a Florida school.

But the company has continued to sell some guns following a background check.

McMillon said a ban on assault weapons “should be debated to determine its effectiveness in keeping weapons made for war out of the hands of mass murderers.”

Shares rose 4.9 percent to $111.43 in mid-morning trading.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.