Walmart Inc. said sales rose in the most recent quarter, a sign that the retail behemoth continues to take market share from competitors and benefit from strong consumer spending ahead of the busy holiday shopping season.
U.S. comparable sales, those from stores and websites operating for at least 12 months, rose 3.2%, marking a five-year streak of quarterly sales gains. E-commerce sales rose 41% in the U.S. bolstered by online grocery orders.
The comparable-sales growth and adjusted earnings were ahead of most Wall Street analysts’ forecasts. Morgan Stanley analysts said the growth in U.S. earnings before interest and taxes was the best in eight years. Walmart shares, which have rallied about 30% this year, gained 1.2% in Thursday morning trading.
“We continue to see good traffic in our stores,” CEO Doug McMillon said in a conference call. “We’re growing market share in key food and consumables categories.”
President Trump weighed in on the results, saying Walmart’s healthy sales were proof that his administration’s imposition of tariffs on Chinese imports wasn’t driving up prices or hurting U.S. consumer spending. “Walmart announces great numbers. No impact from Tariffs,” he tweeted.
A large tranche of tariffs on consumer goods hasn’t yet gone into effect, but is scheduled to be implemented Dec. 15.
Walmart Chief Financial Officer Brett Biggs said on a call with reporters the company is continuing to monitor those discussions, and its merchants are working on mitigation strategies.
Walmart raised its guidance for the full year, as it often does during its third quarter earnings announcement. Adjusted earnings per share will rise slightly for the full fiscal year, the company said. Previously Walmart said earnings per share would be flat.
Walmart has been pushing online grocery delivery as it competes with Amazon.com Inc. to be the most convenient shopping option for Americans. In the U.S., it now has more than 3,000 locations where customers can drive up to pick up groceries and more than 1,400 locations that offer home delivery from stores. Walmart is the country’s largest grocer and grocery sales account for 56% of its total U.S. revenue.
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Walmart’s shoppers, who include most U.S. consumers, are healthy, Mr. Biggs said in an interview. “What we are seeing from the consumer is pretty good and pretty consistent,” as the company continues to monitor employment rates, fuel prices and wage growth for any economic shifts, the CFO said.
Outside the U.S., Mr. McMillon said the company faces challenges in several countries where it operates. He said concerns about Brexit continue to depress consumer spending in the U.K., and in Chile Walmart has had to close its stores due to civil unrest.
International sales were $29 billion, or about 23% of the quarter’s total sales. Gains abroad were led by China and Mexico, and include Flipkart, an Indian e-commerce company, purchased a year ago.
Walmart is the first major U.S. retailer to report its latest results. Several chains next week will offer a glimpse of the industry’s financial health heading into the holidays, including Target Corp. , Best Buy Co. and Macy’s Inc.
In the U.S., retailers and industry consultants have largely predicted solid holiday sales amid low unemployment and rising wages that bolster consumer confidence. But the economy is growing at a slower pace than it did last year and there is “considerable uncertainty around issues including trade,” Matthew Shay, president of the National Retail Federation, said last month.
Net income was $3.29 billion in the quarter ended Oct. 31, compared with $1.71 billion in the year-ago period when Walmart booked a large loss on its investment in Chinese e-commerce site JD.com. Total revenue was $128 billion, up from $124.9 billion a year ago.
Adjusted earnings per share hit $1.16. On that basis, analysts were expecting earnings of $1.09 per share, according to Thomson Reuters.
Last month, Walmart said Greg Foran, its head of U.S. stores who led a turnaround in the business, would leave and be replaced by John Furner, formerly head of Sam’s Club. Mr. Furner took the reins of the business, which provides the bulk of Walmart’s sales and profits, Nov. 1.
Walmart is also pushing a new grocery delivery membership that offers unlimited delivery for a fee, a sign that the company is making another attempt to compete with Amazon’s Prime membership program that offers fast delivery and other perks like video streaming for a fee.
Walmart’s Delivery Unlimited program is now available from 1,400 stores, the company said Thursday. Earlier this month, Walmart also started offering a service that delivers groceries into customer’s refrigerators in three cities for $19.95 a month.
On Thursday, the company also reopened a Walmart store in El Paso, Texas, that was shut down following a deadly shooting on Aug 3. The store is one of the country’s busiest and Walmart said the majority of its 375 workers were returning to their jobs.
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