Table of Contents
BENTONVILLE, Ark. — Walmart cited strong grocery sales and gains in e-commerce in posting fiscal third quarter earnings that beat consensus estimates.
“We had strong revenue growth across segments for the quarter, and we’re excited to get an early start to the holiday season,” said Doug McMillon, Walmart’s president and chief executive officer.
Walmart said revenue increased 5.2% to $160.8 billion.
The company’s consolidated gross margin rate increased by 32 basis points on improvement at its Walmart U.S. unit and the timing of Flipkart’s The Big Billion Days sales event, which this year occurred in the fiscal fourth quarter.
Walmart U.S. reported net sales of $109.4 billion, up 4.4% including fuel. Comparable sales at Walmart U.S. increased 4.9% in the quarter. Customer transactions rose 3.4%, and the average ticket increased by 1.5%. E-commerce at the U.S. unit was up 24%. Global e-commerce sales increased 15%.
Sam’s Club posted revenue of $22 billion, up 2.8% year over year. Comp sales increased 3.8%, and membership income was up 7.2%.
Walmart International posted net sales of $26.7 billion, up 5.4% in constant currency, led by Walmex and China.
Revenue at its Walmart Connect advertising business increased 26% from a year ago.
Walmart continued to add subscribers to its Walmart+ subscription program, which offers benefits including early access to special offers, free grocery deliveries and free shipping on all orders. The company added a new feature to its subscription program during the third quarter that allows shoppers to sign up for regular shipments of food, paper products, pet supplies and other household staples.
Walmart’s revenue for the first three quarters was $474.7 billion, up 6.1% year over year.
Walmart provided a slightly lower-than-expected forecast for the current quarter, however, citing signs of weaker consumer spending.
“In the U.S., pricing levels in many food categories continue to be a concern. Overall, our product costs are up versus last year, and they remain up even more on a two-year stack, which is putting pressure on our customers,” McMillan said on an earnings call. “Beef prices are high, but we’re happy to see lower pricing in dairy, on eggs, and with chicken and seafood. The pockets of disinflation we are seeing are helping, but we’d like to see more, faster, especially in the dry grocery and consumables categories.
“The other good news is that general merchandise prices continue to come down. GM is down low to mid-single digits versus last year. That enables us to roll back pricing, which will help our customers during this holiday season, when general merchandise is so important for gift-giving.”
McMillon said the U.S. business might be managing through a period of deflation in the months ahead.
For the fiscal year through January, Walmart now expects adjusted earnings per share of $6.40 to $6.48, less than the $6.48 analysts expect but above Walmart’s earlier estimate. Walmart expects consolidated net sales will rise 5% to 5.5%, also up from its prior range.
Earlier this month Walmart hosted Second Best Day celebrations for 117 stores nationwide, marking its largest single-day rollout of re-grand openings for remodeled stores.
“We’re investing more than $9 billion over a two-year period to upgrade and modernize more than 1,400 of our stores across the U.S.,” said John Furner, CEO of Walmart U.S.
“With nearly 90% of the U.S. population living within 10 miles of a Walmart, we understand how important our local stores are to customers and communities,” Furner said, “and these construction investments allow us to create more local jobs and make it easier for our associates to get customers what they want, when they want it.”
Each store’s reopening is part of Walmart’s Signature Experience, which seeks to inspire customers and provide them with a seamless and high-quality shopping experience.
Walmart said that the upgraded features include improved layouts, expanded product selections and innovative technology that allows store associates to better support customers and make shopping more convenient and enjoyable.
