As its consumers began their Christmas shopping, requested more delivery to their homes, and purchased more discretionary items, Walmart increased its prediction on Tuesday.
For the entire year, the discounter now projects net sales to increase by 4.8% to 5.1%. This contrasts with its earlier prediction of a sales growth rate for the period of between 3.75% and 4.75%. Walmart announced higher-than-expected third-quarter earnings and revenue, which prompted the revised projection.
Chief Financial Officer John David Rainey stated in a CNBC interview that sales of general items, which does not include groceries, increased year over year for the second consecutive quarter following decreases for 11 consecutive quarters. Nevertheless, he claimed that because food costs more, people are delaying their purchases until they find a good offer.
He stated, “We anticipate that this holiday season will be very consistent with that.” “Price and value are their main concerns.”
According to an LSEG survey of analysts, the big-box retailer’s reporting for the period contrasted with Wall Street’s projections as follows:
- Adjusted earnings per share: 58 cents as opposed to 53 cents anticipated
- Revenue: $169.59 billion as opposed to the anticipated $167.72 billion
Early trading saw a roughly 3% increase in Walmart shares, which reached a 52-week high and the company’s highest intraday since it started listing on the New York Stock Exchange in August 1972.
Walmart’s net income climbed to $4.58 billion, or 57 cents per share, in the three months that ended on October 31 from $453 million, or 6 cents per share, in the same time last year. Compared to the same quarter last year, revenue increased from $160.80 billion.
With gasoline excluded, Sam’s Club had a 7% increase in comparable sales, an industry indicator commonly referred to as same-store sales, while Walmart saw a 5.3% increase.
Compared to the same quarter last year, customers in the United States visited Walmart’s shops and online more frequently and tended to spend more money there. The average ticket climbed by 2.1% year over year, while Walmart U.S. sales jumped by 3.1%.
In addition to Walmart’s advertising and third-party marketplace operations, curbside pickup and home delivery contributed to a 22% increase in e-commerce sales in the United States.
According to Rainey, Walmart customers have also been prepared to spend extra in order to receive their items more quickly. In the last two quarters, 30% of U.S. consumer purchases have included an additional cost to expedite delivery, such as within one or three hours.
Because we can offset some of the shipping costs with these additional fees that customers are prepared to pay for convenience, he said that Walmart’s online business is “getting very close to profitability.”
As investors assess sentiment and consider the prognosis for the most important shopping season of the year, Walmart, the country’s largest retailer, released its most recent sales data and read on American customers.
This holiday season, Walmart and other retailers are dealing with a variety of issues. With gas costs falling and grocery inflation staying low year over year, inflation has subsided. Fears of a drawn-out presidential election process in the United States never came to pass.
However, new worries about price increases have been stoked by President-elect Donald Trump’s intention to impose taxes on imports from China and other nations. This year’s shortened Christmas season and unusually warm weather in some areas of the United States might be detrimental to shops.
Although it’s too early to predict which products may see price increases, Rainey stated that tariffs might compel Walmart to raise pricing.
He declared, “We never want to raise prices.” “We use daily cheap costs as our model. However, there will most likely be instances where customers will pay more.
According to him, around two-thirds of Walmart’s inventory is produced, cultivated, or put together in the United States, which lowers the danger of tariffs on such commodities. “Like other retailers, Walmart has been trying to diversify where it imports goods,” he noted.
“We’re fairly familiar with that, having been living under a tariff environment for seven years,” he stated. “However, we want to work with suppliers and with our own private-brand assortment to try to bring down prices because tariffs are inflationary for customers.”
This year, holiday spending is predicted to rise, albeit slowly. According to the retail trade association National Retail Federation, holiday spending in November and December is expected to rise 2.5% to 3.5% from 2023 to a range of $979.5 billion to $989 billion. That would be less than the 3.9% annual increase in Christmas spending from 2022 to 2023, when $955.6 billion was spent.
The holiday season is “off to a pretty good start,” according to Rainey.
TVs, Beats headphones, Apple AirPods, and even tires have been selling, he claimed. However, due to abnormally mild weather in several areas of the nation, sales of apparel and other weather-dependent items, such as space heaters, have slowed.
According to him, some of the general goods improvements are a result of Walmart’s approach, while others show that shoppers are feeling less affected by inflation. Through its third-party marketplace, the firm has expanded its selection of toys, household products, and other items.
Walmart’s stock has risen about 60% so far this year, surpassing the S&P 500’s around 24% gains over the same time frame as of Monday’s close. With its shares closing Monday at $84.08, Walmart now has a $675.86 billion market value.
