By Sarah Nassauer
Walmart said U.S. sales rose during the most recent quarter as shoppers bought more groceries, home goods and toys, a sign that spending is off to a steady start at the start of the holiday shopping season. The retail behemoth also raised its sales and profit estimates for the year.
The Results
Sales: U.S. comparable sales, those from stores and digital channels in operation for at least 12 months, rose 5.3% for the quarter ended Oct. 25, driven by broad demand for its goods and market share gains across economic groups, including higher-income households. Analysts were expecting about 3.9% growth, according to FactSet.
Most shoppers are spending consistently to enjoy holidays, said John David Rainey, Walmart chief financial officer, in an interview. Toys are selling well, along with some everyday needs such as tires, he said. Apparel is weaker as unseasonably warm weather has likely delayed some purchases, he said.
"Overall, we are feeling good about holiday," Rainey said. But "consumers are still discerning," he said. "They are spending more of their wallets on food than they have historically." That means overall nonfood items are still growing slower than spending on consumables, he said.
Profit: The retailer said profit increased in the most recent quarter, boosted by offering fewer discounts, lower e-commerce delivery costs and higher revenue from advertising. Adjusted earnings were 58 cents per share, better than the FactSet analysts' estimate of 53 cents.
E-commerce: Global e-commerce sales rose 27% from the same period last year and now account for 18% of global revenue.
The Context:
Shoppers weighed down by higher prices for many everyday necessities such as food and health insurance are still opening their wallets. Retail sales rose more than expected in October as the holiday shopping season kicked off.
Holiday sales are expected to increase slightly this year compared with last, according to estimates from the National Retail Federation and consultants that track seasonal sales. Earlier this month, Amazon said that revenue grew 11% from a year earlier, beating Wall Street's targets. Executives said demand for everyday essentials lifted sales.
Walmart, known for low prices, has reported consistently strong sales for years, gaining market share in many categories. The retail behemoth has also worked to keep more high-income shoppers coming by offering a new store brand of premium food items, refreshed homegoods and a wider online selection.
The Outlook:
Walmart raised its forecast for comparable sales growth for its fiscal year and for adjusted earnings. Executives now expect comparable sales growth of 4.8% to 5.1% for the year, up from its prior forecast of 3.75% to 4.75%. They said the majority of customers are sticking with their holiday spending plans despite any concerns about the election and economic outlook.
Write to Sarah Nassauer at Sarah.Nassauer@wsj.com
(END) Dow Jones Newswires
November 19, 2024 07:20 ET (12:20 GMT)
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