Walmart stock review

Retail stocks plunged on Wednesday after Macy’s reported earnings that were far below expectations, but that wasn’t the whole story for the U.S. retail sector and consumer.

Thursday refuted the narrative that the retail sector was struggling, as Walmart reported better than expected same store sales growth, second quarter earnings, and growth in its ecommerce sales. Walmart shares jumped 5.8% in pre-market trade following the positive second quarter results.

Walmart reported net income of $3.61 billion, or $1.26 per share versus a loss of $861.0 million, or $0.29 per share, for the same period last year. Expectations had been for earnings of $1.22 per share. Also contributing to the positive results were a 2.8% growth in U.S. same-store sales, and a 37% increase in ecommerce sales.

Adding to the narrative of a strong U.S. consumer was the retail sales data released by the U.S. government early Thursday. That data showed retail sales increasing by 0.7% in July, which was the strongest increase in four months, and far outpaced expectations for a 0.3% increase.

Internet retailers posted the strongest gain, with sales increasing 2.8%, most likely due to the impact of Amazon Prime Day. But it wasn’t only internet retailers who made gains. Sales also rose sharply at department stores, restaurants and electronics outlets.

The strong sales and earnings at Walmart, which operates 5,358 U.S. locations, backs up the data from the government, showing strong U.S. consumer spending. There’s simply no way that Walmart’s results wouldn’t show a slowdown in consumer spending, given its huge footprint all across the U.S.