Deutsche Bank has raised its outlook for Walmart’s international operations, citing sustained growth across key markets despite margin headwinds. The bank’s analysis, released Tuesday, highlights a 7.9% increase in international net sales in constant currency for the second quarter, alongside a 19% rise in international e-commerce revenue, which now accounts for roughly 30% of international sales.
The report underscores strong performance in China and India, where Walmart’s net sales grew 20.7% and comparable store sales increased 9.7%. E-commerce sales in China surged 26%, representing 55% of total sales in the market. The company also expanded its physical footprint in China, opening four new Sam’s Club locations during the quarter, bringing the total to 11 new stores over the past year.
Mexico, operated under Walmex, reported net sales growth of 3.2% and comparable store sales up 1.9%, a deceleration from the 4.1% growth recorded in the first quarter. Gross margins in Mexico declined due to price investments, while operating income fell as Walmart allocated funds toward wage increases, store upgrades, and e-commerce infrastructure. The company also launched its marketplace platform in Mexico during the quarter.
Canada delivered net sales growth of 6.0% and comparable store sales growth of 6.1%, with e-commerce sales accelerating to 35% year-over-year growth from 31% in the prior quarter. Walmart introduced its Walmart+ membership program in Canada and expanded U.S. marketplace capabilities north of the border.
Despite these gains, Deutsche Bank noted a 15-basis-point decline in gross margins internationally, attributed to price investments and shifts in store formats. Selling, general, and administrative expenses improved by 29 basis points. Operating income rose 5.7% in constant currency terms, though it increased 16.6% on a reported basis. The bank emphasized that growth in China and India, along with reduced e-commerce losses, were primary drivers of the positive performance.
