WMT Walmart Inc

By Sarah Nassauer 

Walmart Inc. posted higher quarterly sales, continuing a string of solid growth as the world's largest retailer taps into online shopping and a robust U.S. economy ahead of the busy holiday season.

Sales in U.S. stores open at least a year rose 3.4% in the latest quarter , including a 43% jump in e-commerce revenue. Walmart executives said such sales, which exclude volatile gasoline sales, will grow at least 3% for the full fiscal year.

"We have momentum in the business as we execute our plan and benefit from a favorable economic environment in the U.S.," said Chief Executive Doug McMillon in a release.

Total quarterly revenue was $124.9 billion, an increase of 1.4% as lower international sales and currency translations slowed the overall gains. Walmart shed control of its operations in Brazil and is merging its U.K. operations with a rival to focus on its domestic business and e-commerce operations.

Profit attributable to Walmart was down 2.2% from a year ago to $1.71 billion, or 58 cents a share.

The retailer increased its profit outlook for the fiscal year ending in January, saying earnings per share will come in at between $4.75 and $4.85, up from $4.65 to $4.80 the company laid out in October. That estimate was lowered from earlier in the year due to the $16 billion purchase of Indian e-commerce firm Flipkart, part of Walmart's plans to remake its international portfolio.

Walmart's shares were flat in premarket trading, after closing at $101.53 on Wednesday. The shares are trading near an all-time high of $109.98 but are little changed from where they started the year.

In the U.S., Walmart said sales growth was driven by market-share gains in groceries, household goods and other categories. Executives highlighted demand for fresh food and apparel, including Walmart's house brands, as well as toys as the company expanded its selection after the collapse of Toys R Us Inc. It is selling 40% more toys online this fall versus last year.

In the most recent quarter, Walmart's gross margins fell slightly as the company lowered prices, absorbed higher transportation costs and e-commerce made up a larger percentage of sales, said Walmart's finance chief Brett Biggs.

Walmart aims to get closer to profitability in its online segment by selling more items that are infrequent, but higher margin purchases, in addition to common household goods, said Mr. McMillon. "The process takes time, and we're making progress," he said.

Thus far retailers that have made strategic shifts to shrink store footprints and grow sales online appear in position to benefit from an expected robust holiday shopping season, riding a wave of solid economic growth. Wages grew in October at the fastest rate in nearly a decade and the unemployment rate remained at a 49-year low.

On Wednesday, Macy's Inc. said same-store sales rose 3.1% and that initiatives to spruce up its department stores and allow shoppers to buy online and pick up in stores were paying off. Other major chains, including Target Corp. and Best Buy Co., are slated to report results next week ahead of the annual Black Friday shopping event.

Neil Saunders, managing director of consulting firm GlobalData Retail, said that while the strong U.S. economy is helping Walmart, "there is also a strong element of self-help which has propelled growth," referring to store and e-commerce investments the company has made in recent years.

In the U.S., Walmart aims to use its place as the country's largest grocery seller to get ahead of Amazon.com Inc. The company has expanded its grocery pickup program, which lets shoppers order online and pickup at 2,100 of its U.S. stores. Walmart will also add grocery delivery services to about 800 of its stores by the end of the year, using third-party delivery services such as Postmates Inc. and Deliv Inc.

Walmart will overtake Apple Inc. as the third largest e-commerce retailer by sales this year, behind Amazon and eBay Inc., according to data released Thursday by market research firm eMarketer. Walmart is expected to grab 4% of U.S. e-commerce sales, or about $20.9 billion, up from 3.3% last year, the firm predicted. Amazon is expected to take 48% of sales, up from 43.1% last year.

Walmart's efforts in online grocery pickup are driving the expansion, said eMarketer analyst Andrew Lipsman. "As fast as Walmart's ecommerce business is growing, it still pales in comparison to juggernaut Amazon."

Write to Sarah Nassauer at sarah.nassauer@wsj.com

(END) Dow Jones Newswires

November 15, 2018 08:42 ET (13:42 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.