Bentonville, Ark. --A rare sales bump may provide the world’s largest retailer just the momentum it needs going into the important holiday season, say Wall Street analysts, as Wal-Mart reported that 3Q same-store sales rose at U.S. namesake stores for the first time in nearly two years.
However, Wal-Mart tempered the news with warnings that a highly promotional environment lies ahead.
Walmart U.S. comp sales edged up 0.5% for the quarter ended Oct. 31, and U.S. sales climbed 3.4% to $70 billion. Consolidated sales rose 2.8% to $118.1 billion.
Consolidated profit dipped 0.7% to $3.7 billion. Wal-Mart Stores Inc. president and CEO Doug McMillon pointed to the positive comps as highlights of the quarter, but stressed the need to strength sales growth and improve customer experience.
"We're investing in key areas of our business, including wages in our U.S. stores and in e-commerce and mobile capabilities. We continue to see opportunities to improve our business," McMillon said. “We have some things in our favor this fourth quarter, including lower fuel prices in the U.S. and other key markets.”
The comp growth was the first positive same-store sales rise in seven quarters, led by a strong Neighborhood Market performance of 5.5% comp growth. E-commerce shone with sales growth of 21% worldwide on a constant-currency basis.
Traffic at the company’s U.S. Wal-Mart stores fell 0.7% in the October quarter.
Analysts as a whole are encouraged by Wal-Mart’s 3Q results. Stephen Springham, senior retail analyst at Planet Retail, commented, “Although driven more by external conditions than internal initiatives, a positive comp in Q3 will nevertheless provide good momentum for the holiday period - during which, as ever, Walmart will definitely come out with all guns blazing. The challenge for Walmart will be winning the wider war, rather than just the Black Friday and Cyber Monday battles.”
The company, acknowledging that consumers have tightened their spending, said it expects projected same-store sales growth of flat to 1% for its U.S. stores in the current period. Last year, Walmart's comp sales declined 0.4% for the 14-week period ended Jan. 31, 2014.