Walmart’s strong Q3 offers momentum ahead of holidays

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Walmart’s strong Q3 offers momentum ahead of holidays

By Marianne Wilson - 11/15/2018
With the biggest selling season of the year kicking into gear, Walmart on Thursday posted third-quarter earnings fueled by online sales and an increasingly strong economy, beating analyst expectations and leading it to update its full-year guidance.

Net income totaled $1.71 billion, or 58 cents a share for the third quarter, compared with $1.75 billion, or 58 cents per share, in the year-ago period. Excluding one-time items, Walmart earned $1.08 per share, topping estimates of $1.01 a share.

Total revenue rose 1.4% to $124.98 billion, falling short of the $125.55 billion analysts had expected amid currency headwinds. Same-store U.S. sales increased 3.4%, which was higher than expected. Store traffic rose 1.2%, and the average ticket was up 2.2%.

Online sales surged 43%. Grocery is helping to fuel online growth, and the chain noted that grocery pickup of online orders is now available in nearly 2,100 locations. Grocery delivery is available in nearly 600 locations.

Walmart’s online growth has also been boosted by acquiring digitally native brands, with the most recent of which is intimate apparel brand Bare Necessities. A new report from eMarketer predicts that Walmart will over-take Apple in 2018 as the third largest e-commerce retailer (in sales), behind Amazon and eBay.

Analyst Neil Saunders, managing director of GlobalData Retail, commented that, according to his data, Walmart has grown its market share in every major online category over the past year.

“Some of this is down to the various strategic acquisitions the company has made, but a lot is also a function of the investments that have been put into the e-commerce business,” he said. The relaunch of the core site is delivering and the improved design, extended selection, and increased range of delivery and pick-up options have been well received. Our tracking data show a rising level of satisfaction with Walmart’s online proposition and, most pleasing, an increased level of traction with younger shoppers.” For more analysis, click here.

Walmart raised its forecast for earnings and same-store sales in the U.S. for the full year. It raised its adjusted earnings outlook 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%, compared with its previous forecast of “about” 3% earlier in fiscal 2019.

“We have momentum in the business as we execute our plan and benefit from a favorable economic environment in the U.S.,” Walmart CEO Doug McMillon said in a statement. “We’re accelerating innovation and utilizing technology to shape the future of retail.”