Walmart’s Winning Streak Continues
The retail giant’s momentum shows no signs of slowing down, as Walmart (WMT) posts impressive fiscal third-quarter results that surpass Wall Street expectations. Sales reached $169.59 billion, beating analyst estimates of $167.5 billion, while adjusted earnings per share exceeded estimates by 5 cents at $0.58.
A Strong Quarter Across the Board
“We had a strong quarter, continuing our momentum,” CEO Doug McMillon said in a statement. In-store volumes grew, pickup from store grew faster, and delivery from store grew even faster than that. Shares of Walmart rose over 4% in premarket trading on Tuesday, with the stock up 60% year to date, outperforming the Dow Jones Industrial Average’s 15% advance.
Key Performance Indicators
- Revenue: $169.59 billion versus $167.5 billion
- Adjusted earnings per share: $0.58 versus $0.53
- Overall same-store sales growth: 5.5% versus 3.81%
- Walmart US same-store sales growth: 5.3% versus 3.68%
- Traffic: 3.1% versus 2.82%
- Ticket growth: 2.1% versus 1.20%
- E-commerce growth: 22% versus 2.22%
- Sam’s Club US same-store sales growth: 7.0% versus 4.22%
Driving Growth
Walmart US saw same-store sales jump 5.3%, driven by more foot traffic and a higher average ticket. E-commerce sales jumped 22%, while advertising unit Walmart Connect grew 26%. Membership income also saw a double-digit increase. The retailer notched gains across all product categories and income cohorts, primarily driven by upper-income households.
Grocery Sales Soar
Sales in the groceries category grew by mid-single digits, with “food units reaching the highest level in four years” led by pantry products. Personal care and household cleaning products also saw sales growth. Its private-brand penetration rose 80 basis points as it doubled down with new lines like BetterGoods early this year.
Holiday Shopping Season Outlook
Walmart signaled it sees the momentum continuing for the holiday shopping season, raising its guidance for fiscal year 2025 for the third time. Net sales are now expected to grow between 4.8% to 5.1%, with adjusted operating income expected to grow between 8.5% to 9.25%.
Value and Convenience
Walmart has maintained an edge in value, offering prices that are about 10% to 12% cheaper for an average basket of food. Its strategy is giving consumers the ability to shop the way they want to, whether it be ordering online and picking up at the store or having it delivered right to their doorstep.
International Performance
Walmart International revenue grew 8.0% to $30.3 billion in Q3, led by growth from Indian e-commerce firm Flipkart, which Walmart owns a majority stake in. Businesses in Mexico and China reported strength from Sam’s Club and e-commerce.
Investor Confidence
Investors are keeping an eye on Walmart’s alternative revenue streams through membership models like Walmart+ and its advertising channel, Walmart Connect, which continue to perform well. Its e-commerce marketplace is “getting very close to being profitable,” according to Goldman Sachs analyst Kate McShane.
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