Strong U.S. economy boosts Walmart's third-quarter sales

The Walmart logo is displayed on a screen on the floor of the NYSE in New York
The Walmart logo is displayed on a screen on the floor of the NYSE in New York  

By Nandita Bose

NEW YORK (Reuters) - Walmart Inc reported higher-than-expected quarterly U.S. comparable sales on Thursday and raised its full year outlook as a strong economy boosted customer store visits and e-commerce purchases grew as it sold more groceries online.

The retailer's profits, however, continued to be under pressure. Margins were impacted as Walmart absorbed higher transportation costs and invested heavily in its online business.

Walmart's shares, which traded up premarket and opened higher, reversed course in early trade. Shares were down 1.04 percent at $100.47 per share as investors were spooked by poor performance from J.C. Penney and Dillard's Inc, turning bearish on retail stocks, analysts said.

Strong consumer spending has helped many brick-and-mortar retailers post solid sales gains this quarter, ahead of the key U.S. holiday season even as e-commerce investments have gnawed away profits.

"Fresh (food) continues to do very well but there is strength across the board from a category standpoint," Chief Financial Officer Brett Biggs told Reuters in an interview.

Grocery sales make up 56 percent of Walmart's revenue, and at its investor day last month Walmart's Chief Executive Doug McMillon emphasized Walmart's advantage in the food category, an area that rival Inc is trying to crack, particularly following its acquisition last year of organic grocer Whole Foods. McMillon said Walmart can offer fresh food within 10 miles of 90 percent of the U.S. population.

The company has expanded its grocery pickup program, which allows customers to order online and pickup at 2,100 of its U.S. stores. Walmart will also add grocery delivery services to about 800 stores by the end of the year, the retailer's U.S. CEO Greg Foran said.

Walmart will overtake Apple Inc as the third largest e-commerce retailer by sales this year, behind Amazon and eBay Inc, according to data released Thursday by market research firm eMarketer. Walmart is expected to grab 4 percent of U.S. e-commerce sales, or about $20.9 billion, up from 3.3 percent last year, eMarketer said.

Walmart's sales at U.S. stores open at least a year rose 3.4 percent in the third quarter, excluding fuel price fluctuations, higher than analysts' estimates of a 2.87 percent increase, according to IBES data from Refinitiv.

Walmart has recorded over four straight years of U.S. growth, unmatched by any other retailer.

E-commerce sales soared 43 percent, topping the 40-percent growth in the previous quarter. The retailer has said it is on track for e-commerce sales to rise by 40 percent this year.

The retailer has also been on an acquisition spree, buying brands aimed at millennial shoppers who typically don't shop on the retailer's website. Walmart recently bought lingerie retailer Bare Necessities after purchasing plus-sized clothing startup Eloquii a week earlier.

The company's e-commerce business is expected to post a slightly greater operating loss next year, the retailer said during investor day.

Walmart's international sales grew 1.6 percent to $30 billion excluding currency impact. In India, one of its key overseas markets, Walmart suffered a setback on Tuesday when the chief executive officer of its Indian e-commerce business Flipkart Group, resigned following an allegation of sexual assault.

Walmart paid $16 billion for a roughly 77-percent stake in Flipkart in May, its biggest acquisition and a major move in competing against Amazon.

Walmart's quarterly total revenue increased 2.4 percent to $126.1 billion, excluding currency changes, beating analysts' estimates of $125.56 billion.

Adjusted earnings came to $1.08 per share, above expectations of $1.01. Consolidated net income attributable to Walmart for the third quarter stood at $1.71 billion versus $1.75 billion a year ago.

Walmart raised its adjusted earnings outlook for fiscal year 2019 to $4.75 to $4.85 per share from $4.65 to $4.80. It also said it expects comparable sales, excluding fuel, to grow "at least" 3 percent, a change from "about" 3 percent earlier in fiscal 2019.

(Reporting by Nandita Bose in New York; Editing by Jeffrey Benkoe and Nick Zieminski)


More Related News

Same-Day Delivery Is Driving Target Sales
Same-Day Delivery Is Driving Target Sales

The company has actually beaten Amazon and Walmart in rolling out select digital fulfillment services.

Walmart Has Big Plans for Its New HQ
Walmart Has Big Plans for Its New HQ

The retail giant is getting a much-needed home office makeover with a new campus-style headquarters in Arkansas.

Buy Dollar General (DG) Stock Before Q1 Earnings After Target Soars?
Buy Dollar General (DG) Stock Before Q1 Earnings After Target Soars?

It's time to see if investors should consider buying Dollar General (DG) stock heading into Q1 earnings?

Transplace Hires Former Walmart Executive
Transplace Hires Former Walmart Executive

Transplace has hired a former Walmart Inc (NYSE: WMT) executive who helped oversee transportation and supply chain operations. Tracy Rosser will serve as executive vice president for operations at the transportation management services and logistics technology firm, which announced the appointment on May 22. Transplace is a member of the Blockchain in Transport Alliance (BiTA).

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: Economy

Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.