By Sarah Nassauer
American consumers showed no signs of belt-tightening in sales
results from Walmart Inc., offering comfort to retailers worried
about fallout from the trade war and the health of the global
economy as the holiday shopping season nears.
Walmart said its U.S. comparable sales, those from stores and
websites operating for at least 12 months, rose 3.2% in the period
ended Oct. 25, marking a five-year streak of quarterly sales gains.
Its e-commerce sales in the U.S. rose 41% from a year earlier,
bolstered by grocery orders.
"We continue to see good traffic in our stores," Chief Executive
Doug McMillon said in a conference call on Thursday.
President Trump weighed in on Walmart's results, saying they
were proof that his administration's imposition of tariffs on
Chinese imports wasn't driving up prices or slowing consumer
spending. "Walmart announces great numbers. No impact from
Tariffs," he tweeted.
More tariffs on consumer goods is scheduled to take effect Dec.
15, while Washington and Beijing continue to bandy about trade
proposals.
Walmart finance chief Brett Biggs told reporters that the
company is continuing to monitor those discussions, and its
merchants are working on ways to cushion the effect of trade
actions. He also said management is keeping tabs on employment
rates, fuel prices and wage growth for any economic shifts.
"What we are seeing from the consumer is pretty good and pretty
consistent," Mr. Biggs said in an interview.
Walmart is the first major U.S. retailer to weigh in on its
recent performance. Several chains next week will offer a further
read on 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 National Retail Federation, said last month.
Walmart's earnings were ahead of most Wall Street analysts'
forecasts. Morgan Stanley said the retailer's growth in U.S.
earnings before interest and taxes was the best in eight years. The
company raised its guidance for the full year, as it often does
when reporting third-quarter results. It now sees adjusted earnings
per share rising slightly, rather than coming in flat.
Walmart shares, which have rallied about 30% this year, ended
Thursday little changed at $120.65 as some investors worry that
online sales of nonfood items aren't growing fast enough.
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 collect groceries and more than 1,400
locations that offer home delivery from stores.
Walmart is the country's largest grocer, with grocery sales
accounting 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 markets. He said concerns about Brexit continue to
depress consumer spending in the U.K., and Walmart has had to close
its stores in Chile 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, the Indian e-commerce company that Walmart
purchased a year ago.
Net income was $3.29 billion in the quarter ended Oct. 31,
compared with $1.71 billion in the year-earlier 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.
Adjusted earnings per share hit $1.16. On that basis, analysts
were expecting earnings of $1.09 a share, according to Thomson
Reuters.
Last month, Walmart announced the departure of Greg Foran, who
led a turnaround for its U.S. stores. On Nov. 1, John Furner,
formerly head of Sam's Club, took the reins of the business, which
provides the bulk of Walmart's sales and profits.
Walmart is pushing a new grocery membership that offers
unlimited delivery for a fee, in an apparent challenge to Amazon's
Prime membership program, which 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
August 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 19:11 ET (00:11 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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