Revenue edges up but falls short of analysts' estimate
The company earned $3.03 billion, or 98 cents a share, during the quarter, down from $1.03 per share a year ago. Analysts, on average, had projected earnings of 96 cents per share, according to Thomson Reuters. Third quarter sales were $118.18 billion, up 0.7% from last year but below the Thomson Reuters forecast of $118.7 billion.
Same-store sales rose 1.2%, just shy of Wall Street’s 1.3% forecast. But store traffic advanced for the eighth consecutive quarter. E-commerce sales — which had been an ongoing concern — gained steam during the period, growing 20.6%. The September purchase of online retailer Jet.com helped lift digital sales.
Calling the performance “solid,” president and chief executive officer Doug McMillon said that “e-commerce growth accelerated, operations in the U.S. continued to strengthen and international delivered another solid performance. We are pleased that we can see real progress stemming from our strategic choices … Yet, we are not satisfied. We will continue to change and pick up speed to reach our longer-term aspirations. We’re positioned well for this important fourth quarter.”
The results led the discounter to raise the lower end of its full-year earnings guidance. The company now projects earnings per share of $4.20 to $4.35 a share, compared to the previous $4.15 to $4.35.
In its overseas business, 10 of Walmart’s 11 markets recorded same-store sales gains, with China flipping from a slide to an advance, and the ultracompetitive U.K. market remaining a challenge. International sales dipped 4.8%, but increased 2.4% when adjusted for currency swings.
Walmart entered the quarter with momentum. During the second quarter, domestic same-store sales climbed 1.6%, the largest gain in four years.
The retailer has been concentrating on making stores cleaner and faster to shop, with close attention to customer service. For the crucial upcoming shopping period, Walmart is having “holiday helpers” wearing Santa hats point shoppers to the shortest checkout line, and it is opening extra registers when stores get busy. It’s also enlivening the shopping experience by doubling the number of product demonstrations it holds, to 150,000, and putting up selfie booths.
Executives expressed confidence that holiday spending will be relatively strong, even in the aftermath of the fraught presidential election. “I don’t see big changes out there,” Walmart U.S. CEO Greg Foran said during a call with reporters. “Business as usual would be my summation.”
To drive web sales, the company has boosted its online assortment, and it will unveil Black Friday deals on Walmart.com hours before they hit shelves on Thanksgiving Day.
“Walmart continued to capitalize on its investments in [the third quarter] as evidenced by its impressive online sales performance, with growth of over 20% on a $14 billion to $15 billion base, without a full quarter of impact from Jet.com,” Moody’s analyst Charlie O’Shea said in a note.
Buckingham Research Group said in a note, “We view the same-store sales growth as evidence that Walmart’s investment in labor, e-commerce and marketing its value message are working. However, some investors may be disappointed that traffic and comps decelerated slightly.”