Wal-Mart Sales Edge Up, Though Profit Falls -- 2nd Update
November 17 2016 - 9:00AM
Dow Jones News
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)
Copyright (c) 2016 Dow Jones & Company, Inc.
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