Deutsche Bank sees Walmart's international growth strategy expanding

Investing.com -- Walmart's international division reported net sales growth of 7.9% in constant currency for the second quarter, according to a Deutsche Bank analysis released Tuesday. Operating income rose 5.7% in constant currency despite investments in Mexico and Canada.

China led performance across Walmart's international markets with net sales growth of 20.7% and comparable store sales up 9.7%. E-commerce sales in China increased 26%, reaching 55% of total sales in the market. The company added four new Sam's Club locations in China during the quarter, bringing the total to 11 new stores over the past year.

In Mexico, Walmex reported net sales growth of 3.2% with comparable store sales up 1.9%, down from 4.1% in the first quarter. Gross margin declined due to price investments, while operating income decreased as the company invested in wages, stores, and e-commerce infrastructure.

Canada generated net sales growth of 6.0% and comparable store sales growth of 6.1%. E-commerce sales in Canada accelerated to 35% growth from 31% in the prior quarter. Walmart launched its Walmart+ membership program in Canada during the quarter and expanded its U.S. marketplace capabilities to the Canadian market.

International e-commerce grew 19% overall, representing approximately 30% of international sales. The company reported that 65% of e-commerce units were delivered same or next day, with roughly half delivered in less than one hour.

Walmart expanded its marketplace platform to both Mexico and Canada during the quarter. International operating income increased 16.6% on a reported basis and 5.7% in constant currency, driven by China and India performance along with lower e-commerce losses.

Gross margin declined 15 basis points due to price investments and format mix, while selling, general and administrative expenses improved by 29 basis points.

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