Walmart, the largest grocer and largest private employer in the United States, made out like a bandit in its second quarter. In response, the company raised its earnings and sales full-year outlook for the second time. The world’s largest retailer announced quarterly revenues that beat analyst predictions on Wall Street. Its shares sank by more than 3% in pre-market trading. This decline has occurred even under Walmart’s business model of extreme resilience. This is evidence that tariffs haven’t managed to hurt Walmart.
Walmart beat analysts’ estimates in the second quarter, leading the retail giant to raise its full-year earnings guidance. As the retailer sails through the perfect storm of today’s difficult economy, they continue to lead through adversity such as record inflation and supply chain crisis. Even with this good news around earnings, the market was down on this news as investors expressed concerns about what this might mean for future quarters.
Walmart’s success at surviving and even prospering in the face of those tariffs is impressive. Yet the company has continued to keep prices low and its product variety high. Our proactive trade strategy has been instrumental in minimizing the damaging effects of tariff rollouts.
In contrast to Walmart’s positive financial developments, Claire’s, a popular accessories retailer, filed for bankruptcy earlier this month. The company has agreed to sell most of its North American business to private equity firm Ames Watson for $1.4 billion. This strategic shift is designed to stabilize Claire’s local operations and help Claire return to profitability after several years of losing sales.
This week, you may have noticed that the U.S. and the European Union stole those headlines when they released new information on their own trade agreement. Their mission is to address tariff issues directly. As part of the agreement, the U.S. will impose a cap of 15% on tariffs related to Europe’s pharmaceutical sector. Further, other products—ranging from lumber to semiconductors—would have their tariff rates capped at 15% as well. Moreover, special rules will be applied to European cars and auto parts that lead to a 15% charge.
At the same time, ESPN made a big news of its own on the streaming front. For the first time, the full linear TV catalogue will be accessible via OTT across all networks in one centralised place. This strategic move taps into the new reality that many consumers – including families – are searching for more affordable digital entertainment choices.
In another piece of related economic news, the Federal Reserve just this morning released the minutes from its July meeting. These minutes brought to light major issues such as tariffs, inflation, and the overall labor market. Lisa Cook, a member of the Board of Governors of the US Federal Reserve, emphasized the importance of addressing these challenges as they could influence economic stability going forward.
“handle matters as she needs to handle them” – Jeff Schmid
As various sectors adjust to evolving economic realities, Walmart remains a focal point with its proactive approach to earnings and sales adjustments. The parallel tales of Walmart and Claire’s highlight the varied predicaments retailers find themselves in amid the twin crises of the pandemic and e-commerce disruption.