The nation’s largest retailer just flexed its muscles

Walmart released its Q2 earnings report yesterday. And, much like The Shawshank Redemption, it could’ve been better – but not by much.

The biggest retailer in the US beat analysts’ expectations on both revenue ($161.63 billion vs. $160.27 billion expected) and earnings ($1.84/share adjusted vs. $1.71/share expected).

Same-store sales in the US also beat expectations, growing by 6.4% in the second quarter, excluding fuel, compared with the year-ago period (vs. 4.1% expected). And e-commerce sales came in strong, increasing 24%.

• Basically, Walmart’s Q2 is reminiscent of the kid who always says they’ll fail the exam but actually gets a 95%. Though we’ll see if it stays that way – the retailer raised its full-year forecast yesterday (a higher target to hit), citing strong demand for its low-priced groceries and health and wellness products.

🤔 Zoom out: Walmart’s earnings stand in stark contrast to Target, which on Wednesday reported a comparable sales decrease of 5.4%, worse than expected, and slashed its forecast for the year.

But there’s a potentially simple reason for the disparity – how they make money. Walmart, the nation’s largest grocer, makes more than half of its annual revenue from selling groceries, a category shoppers buy even when times are tight. Target, on the other hand, only attributes 20% of its annual revenue to grocery items, making it more reliant on consumers’ discretionary spending.