Walmart Boosts Outlook After Beating Estimates
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Walmart Inc. is approaching the crucial holiday season on a high note, posting solid third-quarter sales and raising its full-year outlook again, showcasing its resilience in the face of Amazon.com鈥檚 advances. Shares rose.
Comparable sales excluding gas for Walmart stores in the U.S. rose 3.2% in the period, beating analysts鈥 3.1% growth estimate and marking the 21st straight gain. Both the number of customers and the size of their average orders were up, fueling the growth.
鈥淚t was a really good third quarter,鈥 Chief Financial Officer Brett Biggs said in an interview, adding that he鈥檚 鈥減leased鈥 with how shoppers are responding so far to the rollout of early holiday deals. Walmart now sees full-year adjusted earnings per share increasing slightly compared with last year, after saying in August either a slight decrease or slight increase was possible.
This is the second time this year Walmart has upgraded its outlook. The rosier view contrasts with more downbeat expectations from retailers such as Macy鈥檚 Inc., which slashed its profit guidance in August. Earlier this month, Moody鈥檚 cut its expectations for the entire U.S. retail sector, citing 鈥渋ntense competition in the fight for market share.鈥 Walmart, buoyed by its market-leading grocery business and big investments to improve e-commerce, has largely avoided the turmoil that鈥檚 afflicted many mainstream merchants over the past two years.
鈥淲almart continues to position itself near the very top of global retail by any measure, and will continue to get stronger as time goes on, increasing the pressure on the rest of global retail,鈥 Charlie O鈥橲hea, an analyst at Moody鈥檚, said in a note.
Walmart shares rose as much as 3.9% in pre-market trading, putting the shares on course to open above the all-time highest closing price recorded on Nov. 13. Rival Target Corp. also gained in pre-market trading.
Walmart鈥檚 web sales in the U.S. rose 41%, ahead of its expected growth rate for the full year. It has rapidly expanded its online grocery service and in recent weeks debuted a new offering in three cities where employees put the food right into customers鈥 fridges. Profitability has been a concern on the dot-com side, though, and Biggs said in prepared remarks that the company needs to sell more general merchandise, which delivers better margins than bread and bananas.
Sam鈥檚 Club, the company鈥檚 warehouse division that accounts for about 11% of its revenue, was one weaker spot. Comparable sales there rose only 0.6%, just one-third the pace analysts surveyed by Consensus Metrix had been expecting. A drop in tobacco sales negatively hit sales by 350 basis points, it said. The chain is still without a leader a month after Sam鈥檚 CEO John Furner was tapped to replace Greg Foran as head of Walmart鈥檚 U.S. stores division. Biggs provided no update on the search Nov. 14.
Walmart Inc. ranks No. 4 on the Transport Topics Top 100 list of the largest private carriers in North America.
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