Walmart Raises FY27 Outlook Despite Weakest Comparable Sales Growth in Six Years

Market Commentary

South African Market Summary

South African equities ended lower on Thursday, with the JSE All Share index declining 0.34% to 115,659.23 points and the Top 40 easing 0.29% to 108,146.22. Exxaro Resources reported a 20% decline in half-year earnings, with higher production costs and a stronger rand weighing on commodity-linked revenue. Domestic activity data were mixed. The value of building plans passed increased 6.1% in the first half of 2026, supported by gains in residential and non-residential projects, although additions and alterations declined. Wholesale trade remained weak, with real sales falling 6.8% year on year in June and 3.4% month on month. Seasonally adjusted wholesale trade sales also declined 4.2% quarter on quarter in the second quarter.

European Market Summary

European equities edged lower on Thursday, with the STOXX 600 slipping 0.12% to 650.35 and extending its losing streak to seven sessions, the longest since September 2023. Elevated oil prices continued to fuel inflation concerns, although some stabilisation in global bond markets following US Treasury intervention limited broader losses. German producer prices recorded their fastest annual increase in more than three years in July, driven by higher intermediate-goods and energy costs. JD Sports fell 14.3% after cutting its profit outlook following weaker-than-expected second-quarter underlying sales, particularly in North America. In the UK, consumer confidence improved to a two-year high in August, with the GfK index rising to -14 from -17, while historical GDP estimates were revised higher.

US Market Summary

US equities closed lower on Thursday as renewed increases in Treasury yields weakened risk appetite, while disappointing Walmart results and higher oil prices added to concerns about consumer spending and inflation. Walmart shares fell 9.2% after quarterly comparable sales missed expectations, weighing on both consumer staples and discretionary stocks. Treasury yields resumed their climb despite comments from Treasury Secretary Scott Bessent that government bond repurchases could be increased further, suggesting the initial impact of expanded buybacks had faded quickly. Long-term yields remain elevated amid concerns over rising US government debt and inflation above the Federal Reserve’s 2% target. Federal Reserve officials reiterated that monetary policy decisions would remain focused on labour-market conditions and inflation rather than Treasury debt-management measures.

Asian Market Summary

Asian equities were broadly headed for weekly declines on Friday as persistent global bond-market stress and elevated oil prices kept inflation risks in focus. In Japan, core consumer inflation accelerated in July as firms passed on higher import costs linked to a weaker yen and the US-Israeli war with Iran, strengthening expectations that the Bank of Japan could raise its policy rate to 1.25% from 1.00% at its 17–18 September meeting. Japanese manufacturing also strengthened, with the flash PMI rising to 55.1 in August from 54.5 in July as new orders grew at their fastest pace since January 2018. Elsewhere, Chinese and Indonesian foreign and defense ministers were due to meet, with security, political and economic issues expected to dominate discussions.

Currency Market Summary

The South African rand was steady in early trade as investors assessed developments in US bond markets and avoided taking large positions. The dollar remained under pressure and was heading for a weekly decline of more than 0.8%, trading near a three-month low at 98.82 against a basket of major currencies. Sentiment was shaped by the US Treasury’s decision to double buybacks of longer-dated securities over the next quarter, with Treasury Secretary Scott Bessent indicating purchases could be increased further. Investors viewed the intervention as a temporary response to rising yields, while also questioning the increasingly active policy approach. The yen weakened amid wide US-Japan rate differentials, despite stronger Japanese core inflation reinforcing expectations of a potential Bank of Japan rate increase.

Commodity Market Summary

Gold prices edged higher on Friday and were on course for a third consecutive weekly gain, supported by a weaker US dollar and the US Treasury’s expanded bond-buyback programme. Oil prices were broadly unchanged in early trade but remained positioned for a second straight weekly advance as the continuing US-Iran conflict disrupted supply from the Middle East. Concerns remain that the absence of a renewed peace agreement could prolong constraints on output and exports from major regional producers, including Saudi Arabia, Iraq, the UAE and Kuwait. Geopolitical risk increased further after President Donald Trump threatened expanded economic measures against Tehran and warned countries against providing support to Iran. Persistent supply uncertainty and elevated geopolitical tensions continue to underpin crude prices despite limited movement in Friday trading.

Domestic Company News 

Exxaro Resources Limited (EXX) -3.16%
Exxaro Resources reported a mixed first-half performance for the six months ended 30 June 2026, with revenue rising 7% to R22.1 billion from R20.6 billion a year earlier, while net operating profit declined 2% to R4.0 billion. Attributable earnings per share fell 19% to 1,395 cents and headline earnings per share decreased 20% to 1,377 cents, reflecting weaker earnings despite higher revenue. The board declared a gross interim dividend of 700 cents per share, 17% below the prior period’s 843 cents. The dividend is payable on 5 October 2026 to shareholders recorded on 2 October, with a net local dividend of 560 cents per share after the applicable 20% withholding tax for shareholders not exempt or qualifying for a reduced rate.

Spur Corporation Limited (SUR) +6.17%
Spur Corporation reported stronger underlying performance for the year ended 30 June 2026, with franchised restaurant turnover increasing 6.9% to R12.3 billion and group revenue rising 8.5% to R4.2 billion. Adjusted profit before tax grew 12.8% to R453.1 million, while adjusted earnings per share increased 11.6% to 376.65 cents and adjusted headline earnings per share rose 8.9% to 370.28 cents. Reported profit before tax declined 19.4% to R323.6 million, with reported EPS down 36.1% and HEPS falling 38.4%. The dividend increased 9.0% to 326 cents per share, representing a 7.6% yield. Cash generated from operations reached R488.6 million, unrestricted year-end cash stood at R493.8 million, and return on equity was 22.6%.

CA Sales Holdings Limited (CAA) +1.88%
CA Sales Holdings delivered modest growth for the six months ended 30 June 2026 despite subdued consumer spending and Botswana pula weakness. Revenue increased 2.2% to R6.08 billion, gross profit rose 2.6% to R973.93 million and operating profit advanced 2.3% to R342.34 million. Headline earnings increased 6.4% to R257.13 million, while HEPS rose 5.9% to 53.41 cents and EPS gained 5.1% to 53.31 cents. Total assets increased 9.1% to R6.38 billion, partly reflecting warehouse expansion and acquisitions. CA&S acquired 71.19% of Sunpac’s holding company for R204.1 million and a controlling stake in Pantry Club. Management expects a stronger second half, supported by seasonal trading and increasing contributions from recent acquisitions.

Libstar Holdings Limited (LBR) +6.23%
Libstar expects weaker first-half earnings for the six months ended 30 June 2026, with Total EPS forecast at 8.0–9.6 cents, down 36.8%–47.4%, and Total HEPS at 12.1–13.7 cents, down 18.0%–27.5%. Normalised HEPS from continuing operations is expected at 23.0–25.4 cents, representing a range from 2.4% growth to a 7.3% decline, while Normalised EBITDA is forecast to fall 2.8%–5.8% to R446.1–R460.3 million. Underperformance was concentrated in Dickon Hall Foods and Dry Condiments, while four of seven food sub-categories are expected to deliver EBITDA growth. Earnings were also affected by impairments, asset scrapping, foreign-exchange losses and retrenchment costs. Libstar repurchased 13.8 million shares for R62.2 million during the period.

Global Company News

Walmart Inc. (WMT) -9.15%
Walmart reported its slowest quarterly comparable sales growth in six years, with same-store sales rising 2.6%, below the 3.8% increase expected, although growth was 3.4% excluding pharmacy. E-commerce remained strong, increasing 24%, while Walmart Connect advertising revenue surged 43% and membership revenue grew 17%. The retailer raised its fiscal 2027 net sales growth forecast to 4%–5% from 3.5%–4.5% and lifted adjusted EPS guidance to $2.80–$2.87. However, third-quarter adjusted EPS guidance of 62–64 cents fell below the 68-cent consensus. Management expects price reductions across 11,000 products, partly supported by $2.9 billion in tariff refunds, to stimulate demand, although elevated gasoline prices and softer US consumer spending remain notable headwinds.

Alibaba Group Holding Limited (9988) +1.61%
Alibaba reported a 75% decline in quarterly net profit as sharply higher AI investment weighed on earnings, while revenue increased 9% to 268.95 billion yuan, broadly matching expectations. AI cloud and computing services revenue rose 45% to 48.44 billion yuan, supported by strong demand for enterprise AI infrastructure and model services. Capital expenditure surged 75% to 67.68 billion yuan during the quarter, with Alibaba having deployed roughly half of its planned 380 billion yuan AI investment for 2026–2029. Adjusted earnings per ADS of 8.52 yuan missed the 10.53 yuan consensus. Management expects AI-related capital expenditure to break even within three years and sees broader deployment of proprietary chips as supporting higher gross margins and profitability over time.

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