Walmart Sales Rise; E-Commerce Efforts Get a Lift From Food--Update
November 14 2019 - 9:00AM
Dow Jones News
By Sarah Nassauer
Walmart Inc. said sales rose in the most recent quarter, a sign
that the retail behemoth continues to take market share from
competitors and benefit from strong consumer spending ahead of the
busy holiday shopping season.
U.S. comparable sales, those from stores and websites operating
for at least 12 months, rose 3.2%, extending a four-year streak of
quarterly sales gains. E-commerce sales rose 41% in the U.S.
bolstered by online grocery orders.
But profits continued to come under pressure as Walmart spends
heavily to lower product prices and grow online around the world.
Operating income fell 5.4% from a year ago.
The comparable-sales growth and adjusted earnings were ahead of
most Wall Street analysts' forecasts. Walmart shares gained 3% in
premarket trading.
"We continue to see good traffic in our stores," CEO Doug
McMillon said in prepared remarks. "We're growing market share in
key food and consumables categories."
Walmart raised its guidance for the full year, as it often does
during its third quarter earnings announcement. Adjusted earnings
per share will rise slightly for the full fiscal year, the company
said. Previously Walmart said earnings per share would be flat.
Walmart has been pushing online grocery delivery as it competes
with Amazon.com Inc. to be the most convenient shopping option for
Americans. In the U.S., it now has more than 3,000 locations where
customers can drive up to pick up groceries and more than 1,400
locations that offer home delivery from stores. Walmart is the
country's largest grocer and grocery sales account for 56% of its
total U.S. revenue.
"Our strength is being driven by food, which is good, but we
need even more progress on Walmart.com with general merchandise,"
Mr. McMillon said. "We're mixing the business out better to achieve
better margin rates, but there is more work to do."
Outside the U.S., Mr. McMillon said the company faces challenges
in several countries where it operates. He said concerns about
Brexit continue to depress consumer spending in the U.K., and, in
Chile Walmart has had to close its stores due to civil unrest.
International sales were $29 billion, or about 23% of the
quarter's total sales. Gains abroad were led by China and Mexico,
and include Flipkart, an Indian e-commerce company, purchased a
year ago.
Walmart is the first major U.S. retailer to report its latest
results. Several chains next week will offer a glimpse of the
industry's financial health heading into the holidays, including
Target Corp., Best Buy Co. and Macy's Inc.
In the U.S., retailers and industry consultants have largely
predicted solid holiday sales amid low unemployment and rising
wages that bolster consumer confidence. But the economy is growing
at a slower pace than it did last year and there is "considerable
uncertainty around issues including trade," Matthew Shay, president
of the Nation Retail Federation, said last month.
"The sales environment in the U.S. continues to be positive,
while internationally it's softer and we're responding
appropriately," said Mr. McMillon in his remarks.
Net income was $3.29 billion in the quarter ended Oct. 31,
compared with $1.71 billion in the year-ago period when Walmart
booked a large loss on its investment in Chinese e-commerce site
JD.com. Total revenue was $128 billion, up from $124.9 billion a
year ago.
Adjusted earnings per share hit $1.16. On that basis, analysts
were expecting earnings of $1.09 per share, according to Thomson
Reuters.
Last month Walmart said Greg Foran, its head of U.S. stores who
led a turnaround in the business would leave, replaced by John
Furner, formerly head of Sam's Club. Mr. Furner took the reins of
the business, which provides the bulk of Walmart's sales and
profits, Nov.1
Walmart is also pushing a new grocery delivery membership, that
offers unlimited delivery for a fee, a sign that the company is
making another attempt to compete with Amazon's Prime member
program that offers fast delivery and other perks like video
streaming for a fee.
Walmart's Delivery Unlimited program is now available from 1,400
stores, the company said Thursday. Earlier this month Walmart also
started offering a service that delivers groceries into customer's
refrigerators in three cities for $19.95 a month.
On Thursday, the company also reopened a Walmart store in El
Paso, Texas, that was shut down following a deadly shooting on Aug
3. The store is one of the country's busiest and Walmart said the
majority of its 375 workers were returning to their jobs.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
November 14, 2019 08:45 ET (13:45 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Walmart (NYSE:WMT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Walmart (NYSE:WMT)
Historical Stock Chart
From Apr 2023 to Apr 2024