WMT Walmart Inc

By Sarah Nassauer and Joshua Jamerson 

Wal-Mart Stores Inc.'s revenue rose less than expected in the third quarter, and profit fell 8.2% as the retailer continues to invest billions to boost its e-commerce business and improve stores.

Still, same-store sales rose 1.2% for the quarter, the ninth straight increase. Meanwhile, traffic rose 0.7% and e-commerce sales rose 21%, an acceleration from the second quarter.

Wal-Mart's stock fell 2.9% to $69.31 in premarket trading.

"We're executing well in our stores and making strategic investments in e-commerce to accelerate growth," said company chief executive Doug McMillon in a prerecorded call. E-commerce sales added 0.5% to the U.S. same-store sales figure, he said, "our largest contribution yet." Wal-Mart purchased Jet.com Inc. in September, adding 6 weeks of sales to the results.

The nation's largest retailer said the increase in same-store sales was also driven by strength in its general merchandise and health and wellness business, while its grocery business continued to lag amid food-price deflation. The retailer has invested heavily to improve stores, raising employee wages and adding online grocery pickup services to hundreds of locations.

"We view the same-store sales growth as evidence that Wal-Mart's investment in labor, e-commerce and marketing its value message are working. However, some investors may be disappointed that traffic and comps decelerated slightly" from last quarter, said the Buckingham Research Group in a note. The number of shoppers heading to U.S. stores rose 1.2% in the previous quarter.

The results from Wal-Mart come a day after rival Target Corp. reported sales in existing stores fell slightly, but signaled sales could return to growth over the holiday season as the retailer reported higher online sales buoyed results in the latest quarter.

Some corners of the retail industry have shown strength coming into the holiday season, cheering investors and analysts who have watched Amazon.com Inc. bite into the brick-and-mortar business. Retailers are in a race to log as many sales as possible before Christmas, a stretch that can make or break a retailer's financials for the year.

Charlie O'Shea, lead retail analyst at Moody's, said Wal-Mart is poised for strong holiday sales in the fourth quarter as the company "leverages its store network to handle online orders, especially via its buy online/pick up in store capability, as well as increasing benefits from Jet.com."

While department stores and some apparel makers reported slower sales in recent weeks, discounters, home improvement chains and others said sales are brisk ahead of the holidays. Earlier this week October retail sales logged their best growth rate in nearly two years.

Over all, Wal-Mart posted a profit of $3.03 billion, or 98 cents a share, compared with $3.3 billion, or $1.03 a share, a year ago. The company had projected per-share earnings in a range of 90 cents to $1.

Revenue edged up 0.7% to $118.2 billion, below analysts' projections for $118.69 billion.

Wal-Mart also lifted the bottom end of its full-year guidance range for adjusted profit, now expecting $4.20 to $4.35 a share. Previously, the low-end was pegged at $4.15.

Write to Joshua Jamerson at joshua.jamerson@wsj.com and Sarah Nassauer at sarah.nassauer@wsj.com

(END) Dow Jones Newswires

November 17, 2016 08:45 ET (13:45 GMT)

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