3 days Ago
NEW YORK — Walmart is heading into the official start of the holiday shopping season with strong tailwinds after ratcheting up better-than-expected fiscal third-quarter sales in many items including toys, home goods and groceries. The robust results, announced Nov. 19, underscore how the discosunt behemoth's comparatively low prices have become a powerful draw for shoppers seeking to cut spending where they could in a still inflationary environment.
The nation's largest retailer also raised its outlook. The company's shares closed 3 percent higher at $86.60 after hitting an all-time high of $88.
29 earlier in the session. "We're encouraged by the steady momentum building across the business," Walmart finance chief John David Rainey told analysts during Tuesday's earnings call. The company is among the first major U.
S. retailer to report quarterly results and provides a peek into how Americans are feeling as they head into the holiday season. Rainey said shoppers are spending more on food than general merchandise, and they're becoming more discerning when it comes to big-ticket items like TVs.
One of the most challenging parts of the business has been the clothing business, dragged down by unseasonably warm weather that has made it hard to sell sweaters and coats, Rainey said. Industry analysts expect consumers to show up in force, though sales may not meet last year spending levels by Americans. A post-pandemic inflation spike sent prices about 20 percent higher overall compared with three years ago and it soured Americans' outlook on the economy, a key reason given by voters for sending Donald Trump back to the White House.
Yet even as many complained of how costs have strained household budgets, strong consumer spending continues to drive steady growth in the U.S. economy.
Retail sales rose 0.4 percent from September to October, the Commerce Department said last week, a solid increase though it was half of the previous month's jump. Walmart reported net income of $4.
58 billion, or 57 cents per share, in the three months ended Oct. 31. That compares with $4.
53 billion, or 6 cents per share, in the year-ago period. Adjusted earnings were 58 cents per share, 5 cents better than expected, according to a survey by FactSet. Sales rose 5.
5 percent to $169.59 billion, easily beating forecasts. Comparable store sales — which include online and stores open for the past 12 months — rose 5.
3 percent in the U.S. That is an acceleration from the 4.
2 percent jump in the U.S. in the second quarter and 3.
8 percent in the first quarter. Sales reflect broad-based strength across all product categories and physical and digital channels, the company said. The number of transactions and the average amount customers spent during each of those transactions was higher in this quarter than it was during the same three months last year.
Walmart said its market share gain continues to be driven by higher income households making more than $100,000 a year. Global e-commerce sales rose 27 percent, compared with 21 percent in the fiscal second and first quarters. Analysts are also sifting through Walmart's results and other retailers' results regarding Trump's proposed tariffs.
Trump has vowed that he'll put a 60 percent tariff on goods from China — and a tariff of up to 20 percent on everything else imported into the United States. Companies have already rerouted some production away from China, but an aggressive trade policy could accelerate those plans. Rainey said the company over the past few weeks has moved up some imports to brace for any new tariffs or potential port strikes in January.
Rainey noted that two-thirds of what Walmart sells is made or grown in the U.S., but it will feel pressure to raise prices if Trump's tariffs are implemented.
"Tariffs will be inflationary for customers," he said. Shoe brand Steve Madden announced earlier this month that it will be be cutting the goods that it imports from China by as much as 45 percent next year. For the current fiscal year, Walmart expects earnings per share in the range of $2.
42 to $2.47. That's up from its August projections of between $2.
35 and $2.43. Analysts expect $2.
45 per share, according to FactSet. The company also expects sales to increase by 4.8 percent to 5.
1 percent for the year, up from a range of 3.75 percent to 4.75 percent.
.
