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Walmart CEO calls for discussion on reauthorizing the ban on assault rifles

Doug McMillion, Walmart’s chief executive, addressed gun policy in his remarks about the retail giant’s quarterly earnings. Read More...

Walmart Inc. Chief Executive Doug McMillon said Thursday there should be a discussion about banning assault weapons in the U.S.

McMillon made the comment as Walmart released fiscal second-quarter earnings, but neither he nor Dan Bartlett, Walmart’s WMT, +6.11% executive vice president of corporate affairs who participated in a media call after the earnings were announced, offered specifics on Walmart’s position on the issue.

The retail giant has been at the center of a discussion on gun violence following the Aug. 3 mass shooting at an El Paso Walmart store and a shooting in Mississippi that killed two workers.

Walmart stopped selling military-style rifles including AR-15s in 2015, and ceased selling handguns in every state but Alaska in the mid-1990s.

The retailer raised the age limit to 21 from 18 to buy a gun or ammunition in 2018 after the mass shooting at Marjory Stoneman Douglas High School in Parkland, Fla.

Read: Walmart mass shooting in El Paso puts focus on new risk to retailers

“In the national conversation around gun safety, we’re encouraged that broad support is emerging to strengthen background checks and to remove weapons from those who have been determined to pose an imminent danger,” McMillon said in his comments.

Walmart only sells guns after a background check gets the “green light,” while federal law only requires that there is no “red light” after three business days. And the company will only allow certain employees to sell guns, videotapes the point of sale and has locking cases for firearm security.

“We do not sell military-style rifles, and we believe the reauthorization of the assault weapons ban should be debated to determine its effectiveness in keeping weapons made for war out of the hands of mass murderers,” McMillon said.

“We must also do more to understand the root causes that lead to this type of violent behavior.”

Walmart accounts for about 2% of the firearms market today, the company estimates, “which we believe places us outside at least the top three sellers in the industry.” And the retailer says it has about a 20% share of ammunition.

Also: Opinion: How Walmart and other companies could turn the gun debate

“We think it’s time for Congress to debate,” Bartlett said on the media call. “We’ll lend our perspective. We look forward to the conversation.”

McMillon issued a statement to the company’s associates in the wake of the El Paso shooting in which he said the company was trying to understand the issues that have come out of the shootings at Walmart locations.

“We will be thoughtful and deliberate in our responses, and we will act in a way that reflects the best values and ideals of our company, with a focus on serving the needs of our customers, associates and communities,” the statement said.

Walmart has come under increasing pressure to stop selling guns and was threatened with a boycott after it removed videogame signs displays for films and hunting videos that reference gun violence, but kept guns for sale.

Walmart also reported mixed earnings with profits beating expectations but sales falling short. U.S. same-store sales rose 2.8%, beating the FactSet consensus for 2.6% growth, while e-commerce grew 37%.

The results were enough to push stock futures into positive territory in the premarket hours. Walmart stock was up 4.4% in Thursday trading.

“We like Walmart given the stock’s defensive qualities as we believe the retailer can perform well in both a cautious and optimistic consumer and retail environment,” Cowen analysts wrote in a note. “We have high conviction that combining physical stores with digital options is the future of retail and Walmart shines here.”

Cowen rates Walmart stock at outperform with a $130 price target.

“Walmart continues to steam ahead, with Q2 results again generating favorable returns on the company’s prior investments, a trend which we expect to continue for the foreseeable future,” said Charlie O’Shea, vice president at Moody’s. “In particular, U.S. performance improved on all fronts year-over-year despite the impact of increased promotions in the quarter, particularly surrounding Amazon’s mid-July Prime Day, and Walmart continues to tactically grow market share as evidenced by increased margins.”

Analysts anticipated that other retailers would benefit from the Amazon.com Inc. AMZN, +0.75% Prime Day event in July. Walmart’s McMillon would comment no further than to say that e-commerce was “strong” during the quarter “including for our four-day July sales event.”

The Walmart results likely had many investors in the retail sector breathing a sigh of relief after disastrous numbers from Macy’s Inc. M, -3.81% on Wednesday, which demonstrated the weakness at department stores that Moody’s has described in recent months, and had other analysts concerned that retail is in worse shape than expected.

See: Macy’s results indicate that the retail environment is worse than we thought, analysts say

“We remain bullish on Walmart shares and note the company’s low-price positioning, ability to grow, strong financial position, and defensive product assortment should make this a key stock to own during a period of macro uncertainty,” wrote Quo Vadis President John Zolidis.

Moreover, Zolidis is bullish on other discount retailers after the Walmart announcement, including Target Corp. TGT, +0.82%, Dollar Tree Inc. DLTR, -0.03% and Five Below Inc. FIVE, -0.28%  

Walmart stock has rallied 21% for the year to date while the Dow Jones Industrial Average DJIA, +0.39% has gained 9.7% and the S&P 500 index SPX, +0.25% is up 13.6%.

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