WMT Walmart Inc

By Sarah Nassauer 

Walmart Inc.'s quarterly sales rose at a slower pace than earlier in the coronavirus pandemic even as shoppers continued to buy up food and cleaning supplies and the retailer pushed early holiday deals.

Comparable U.S. sales, those at stores or digital channels operating for at least 12 months, rose 6.4% in the quarter ended in late October. It was a third consecutive quarter of strong growth, though below the prior two quarters. E-commerce sales in the U.S. jumped 79% and accounted for much of the latest quarter's gains.

In the U.S., shopper traffic decreased 14.2%, while the value of the average shopping trip increased 24%. People are making fewer trips to Walmart stores, shifting more spending online and stocking up when they do go to stores, the company said. Sales of groceries, paper goods and household cleaning supplies helped boost sales. Demand for parking lot pickup services or home delivery increased.

"We think these new customer behaviors will largely persist and we're well positioned to serve customers with the value and experience they're looking for," Walmart CEO Doug McMillon said.

Coronavirus has upended the retail landscape, allowing some retailers to thrive as more spending shifts to household basics and home improvements. Others such as department stores and apparel retailers have been hurt by temporary closures early in the pandemic and people buying less clothes for work or going out.

On Tuesday, Home Depot Inc. said its comparable sales jumped 24.1% in the third quarter, but higher costs depressed its profits. Shoppers stuck at home are using money typically spent on restaurants or travel to spruce up their surroundings. Competitor Lowe's Cos. reports earnings Wednesday.

Shares of Walmart rose 2% in premarket trading while Home Depot fell nearly 2%. Both shares have climbed more than 25% so far this year.

"Within Walmart's results are some mixed trends," said John Zolidis, president and retail analyst at Quo Vadis Capital. "Clearly commerce has accelerated, but we can also see traffic was down 14% for the second consecutive quarter and that's a big number." Mr. Zolidis gave Walmart a "sell" rating last month, saying that it will be hard for the retailer to upstage its current results next year.

Walmart has tried to ramp up its online offerings by rolling out grocery pickup and delivery services at more than half its 4,700 U.S. stores. It has also introduced the Walmart+ membership program that gives free delivery for $98 annual fee. The company didn't say how many people have signed up for the service.

The company has also invested in e-commerce operations in the U.S., adding marketplace services and expanding its own selection to compete with Amazon.com Inc. In its September quarter, Amazon's revenue soared 37% to a record $96.2 billion and its profit tripled to $6.3 billion, propelled by both online shopping and its lucrative cloud-computing arm.

While Walmart still is larger in terms of total revenue, Amazon's profit eclipsed Walmart's haul in the latest period.

Walmart reported total revenue of $134.71 billion for the quarter ended Oct. 31, up 5.2% from the year ago quarter. It had a profit of $5.14 billion, compared with $3.29 billion last year. The latest period included $400 million in additional Covid-related expenses, a loss on the Argentina unit sale and a gain on the value of its stake in China's JD.com.

The retailer has been pruning its bricks-and-mortar locations in slower growth countries outside the U.S. During the latest quarter, Walmart agreed to sell its Asda chain in the U.K. and its stores in Argentina. This week, it struck a deal to sell its stores in Japan -- 18 years after entering the island country.

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

(END) Dow Jones Newswires

November 17, 2020 08:51 ET (13:51 GMT)

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