Doug McMillon, chief executive officer of Walmart Inc., declared the economic health of consumers to be strong on Thursday when the retailer reported another solid quarter of results. With Black Friday a little over two weeks away, McMillon acknowledged “potential hurdles, including the shortened holiday selling season” and promised to “remain nimble, so we can adjust as needed.”
Walmart’s net income in the third quarter ended Oct. 31, soared 93.3 percent to $3.28 billion, from $1.7 billion in the year-ago third quarter. Total revenue grew 2.5 percent to $127.9 billion from $124.89 billion in the prior year third quarter, but this was below analysts’ estimates of $128.6 billion. Comp-store sales rose 3.2 percent and Walmart Inc.’s third-quarter earnings per share increased 7.4 percent to $1.16, beating Wall Street analysts’ estimates of $1.09 a share.
The retailer’s shares rose 1.9 percent, to $120.98 in pre-market trading on the New York Stock Exchange.
Walmart raised guidance for the full year of fiscal 2020, including Flipkart, with EPS now expected to increase slightly compared to last year. The retailer’s prior guidance called for EPS to range from a slight decrease to a slight increase. Excluding Flipkart, EPS is expected to increase by a high-single-digit percentage range versus the prior guidance of a mid- to high-single-digit percentage increase.
Walmart e-commerce logged its best quarter of sales growth this year with an increase of 41 percent. Comparable transactions increased 1.3 percent and ticket was up 1.9 percent. McMillon said the comparable sales growth reflects strength across most key categories and channels. Grocery logged a mid-single-digit comp sales gain with the retailer’s varied suite of delivery options fueling the growth. Walmart is on track to offer free same-day grocery pickup from more than 3,100 stores, and 1,600 units able to provide same-day grocery delivery.
Delivery Unlimited, a membership program, launched in the third quarter, along with in-home delivery, which is being piloted in three markets with more than 1 million participating customers. The service brings online grocery orders all the way into consumers’ refrigerators and is seen as a way to grow Walmart’s share of wallet with busy families.
Health and wellness comp sales had a mid-single-digit percentage increase, general merchandise comps rose by a low-single-digit percentage with strength in home and hardlines, but unseasonably warm weather resulted in softness in apparel.
Walmart made its official entrance into the health-care field with the opening of a Walmart Health center in Dallas, Ga., where it’s partnering with local providers to offer affordable services with a low, transparent pricing model, encompassing everything from primary care to lab work to dental. The retailer said it plans to open a second facility in an as-yet undisclosed location, with several more in its sights.
Seven out of 10 international markets registered positive comp sales in the third quarter, with net sales for the division increasing 4.8 percent, including a negative $1 billion currency effect. The U.K. and Central America turned in negative comps in the quarter, while China and Mexico delivered increases of 3.7 percent, and 3.8 percent, respectively.
Momentum at Sam’s Club continued, McMillon said, adding that members are responding to the omnichannel strategy with comp transactions posting a 5.7 percent increase and e-commerce sales ahead by 32 percent. “We’re pleased with the membership trends we’re seeing at Sam’s,” he said. “Comp sales increased 0.6 percent, excluding fuel, and 4.1 percent when excluding fuel and tobacco. On a two-year stacked basis, comp sales, excluding fuel and tobacco, were up 9.8 percent, which is among the strongest results in recent years.”
Sam’s Club ceo John Furner is taking the reins at Walmart U.S., following the departure of Greg Foran, who ushered in positive comps during every quarter of his five-year tenure. “I’m confident John will continue the momentum,” McMillon said.