Boosted by a strong economy and consumer confidence, Walmart Inc. saw same-store sales rise across all segments in the third quarter and U.S. online sales grow 43 percent, the company said Thursday.
The Bentonville retailer also raised its outlook for the fiscal year after revising it downward last month.
Before the stock market opened Thursday, the world's largest retailer reported net income of $1.71 billion, for the quarter that ended Oct. 26, down slightly from $1.75 billion in the same period a year ago. Earnings per share remained the same as last year's third quarter, at 58 cents.
Revenue rose 1.4 percent to $124.9 billion And after adjustment to exclude certain nonrecurring items, Walmart's earnings per share of $1.08 topped the average estimate of $1.01 from 26 analysts surveyed by Thomson Reuters.
The retailer's stock, which opened Thursday at $102.32 on the New York Stock Exchange, had fallen to $98.65 by mid-morning. Its shares had been trading above $100 since Oct. 30.
But Brian Yarbrough, a retail analyst with Edward Jones, said the drop was most likely caused by near-term selloffs, which are to be expected after a share price run-up like Walmart has had in the last few weeks. He pointed out that its shares were trading around $90 when the retailer held its annual meeting with investors on Oct. 16, and has risen steadily since.
Walmart shares fell $1.96, or 1.93 percent, to close Thursday at $99.57. They have traded between $81.78 and $109.98 in the past year.
While pleased with the overall results, Walmart President and Chief Executive Officer Doug McMillon acknowledged in a prepared statement that the company has benefited from "some macro tailwinds," particularly in the U.S.
Walmart's U.S. division, the company's largest, reported net sales of $80.58 billion, up 3.7 percent. Sales at stores open at least a year, excluding fuel, rose 3.4 percent, driven in part by a 1.2 percent increase in store traffic. Same-store sales, also called comp sales, are considered a key indicator of a retailer's health.
Neil Stern, senior partner with retail consultant McMillan-Doolittle, said that with both same-store sales and e-commerce growth coming in strong and above expectations, the U.S. division "continues to hit on all cylinders."
McMillon said the division gained market share in several key categories, including food and many areas of general merchandise. E-commerce also contributed to same-store sales growth, with a strong showing in the online grocery segment.
Walmart now has nearly 2,100 grocery pickup locations nationwide, McMillon said.
Greg Foran, the U.S. division's president and chief executive officer, said in a conference call with reporters that nearly 600 Walmart stores now offer delivery of online grocery orders, and the company plans to bring the service to another 200 stores by year's end.
Walmart's international division reported net sales of $28.8 billion, down 2.6 percent. However, net sales increased in the division's four key markets: Mexico/Central America, China, Canada and the United Kingdom.
Brett Biggs, the retailer's chief financial officer, pointed out in the call that this is the first quarter in which Walmart International's results have included the Flipkart Group -- for about half the quarter -- and reflected its retreat from Brazil.
Walmart's $16 billion acquisition of a majority stake in the Indian e-commerce giant closed Aug. 18. Also in the quarter, the retailer finalized its sale of 80 percent of Walmart Brazil to private equity firm Advent International.
Yarbrough attributed the international division's net sales drop to Flipkart, "which is operating at a pretty big loss."
Stern said the numbers likely reflect the amount of transition the division is going through.
"One of the perils of being a company as big as Walmart, with so many moving parts and pieces, is that hitting them all in the same direction at the same time is always going to be a challenge," he said.
At Sam's Club, Walmart's warehouse club division, same-store sales including fuel rose 5.3 percent and traffic rose 6.2 percent. Still, net sales of $14.5 billion were down 2.3 percent from last year's third quarter.
The strategy with Sam's Club also has been going through a lot of transition, Stern said. Walmart's closure this year of 63 Sam's Club stores is likely affecting revenue -- a number that's not as indicative of a retailer's health as comp sales and e-commerce, he said.
Biggs said during the earnings call that Walmart returned $3.8 billion to shareholders during the quarter through dividends and share repurchases.
Yarbrough and Stern agree Walmart appears to be in excellent shape going into the fourth quarter.
"I think these numbers would suggest that they're poised to have a very good holiday season," Stern said.
Business on 11/16/2018
Print Headline: Walmart logs overall sales gain