Walmart Q3 earnings top forecasts but sales lag; online accelerates

Walmart on Thursday posted third-quarter earnings that managed to beat analysts' expectations even as net sales fell short.



The retailer also lifted the lower end of its full-year guidance and expressed confidence going into the holiday season.



Walmart’s net income fell to $3.03 billion, or 98 cents per share, in the quarter ended Oct. 31, which was two cents more than the Wall Street consensus according to Bloomberg.



Total revenue inched up 0.7% to $118.2 billion, less than expected, hurt by declining food prices and unseasonably warm weather in many parts of the country. Walmart, along with many other retailers, has been challenged by food deflation for the past year.



Same-store sales rose 1.2%, shy of the forecast for 1.3%.



“While the growth figures on Walmart’s top line may not be stellar, they nonetheless indicate that the world’s largest retailer is still capable of eking out growth. They also stand in marked contrast to the more negative figures from rival mass merchant and department store retailers. In short, in a time of change and flux in retail, Walmart is still more than holding its own,” commented Neil Saunders, CEO of retail research and consulting firm Conlumino. “Looking ahead to the holiday period, we believe that Walmart has a sound strategy which involves, but goes way beyond, low prices. Initiatives around exclusive merchandise, entertainment in store, and improved customer service align with consumer demand and should serve the company well in its most important quarter.”



Store traffic rose slightly, for the eight consecutive quarter of growth.



The brightest spot in Walmart’s quarterly results occurred online, where sales increased 20.6% globally, helped by the chain’s acquisition of pure player Jet.com. The digital business added 50 basis points to Walmart’s third-quarter comparable sales, its biggest contribution to date.



We had a solid third quarter,” stated CEO Doug McMillon “Our e-commerce growth accelerated, operations in the U.S. continued to strengthen and international delivered another solid performance. We are pleased that we can see real progress stemming from our strategic choices.”



In September, Walmart completed its $3.3 billion acquisition of Jet.com. The retailer’s results included the operating impact of Jet.com for half of the quarter, as well as the transaction costs related to its billion acquisition.



Walmart raised the lower end of its forecast for the year, now anticipating earnings of $4.20 to $4.35 a share. It earlier set the lower end at $4.15.