Walmart reported earnings and revenue that beat expectations, as shoppers troubled by sticky inflation flocked to the discount chain to start their holiday shopping.
In the three months ended Oct. 31, Walmart reported adjusted earnings per share of 58 cents, beating expectations of 53 cents. The company posted revenue of $169.6 billion, above expectations of $167.7 billion and up from $160.8 billion in the year-ago period.
The company said it now expects net sales to grow between 4.8% and 5.1% this year due to increased demand for discounted goods, up from a previous forecast of between 3.75% and 4.75%.
Walmart shares rose 4.9% Tuesday morning.
CFO John David Rennie said sales outside grocery stores increased year-over-year for the second quarter in a row after 11 consecutive quarters of decline as customers look for good deals. told cnbc,
“We’re hoping this holiday period will be in line with that,” he said. “They’re focused on price and value.”
Buoyant earnings report comes as report There are signs of inflation coming down And gas prices have started to drop – but Americans remain Disappointed with high prices,
Walmart has emerged as somewhat of a standalone in the retail industry as it has increased its market share, “primarily from higher income households.” Households earning more than $100,000 a year accounted for 75% of Walmart’s profits, According to CNN,
This trend is a sign that families at all income levels are looking for discounts and deals as they deal with sticker shock on everyday items — and Walmart is taking advantage of it. Walmart shares are up 66.1% so far this year.
President-elect Donald Trump’s pledge to impose tariffs on imports from China and other countries has raised fears that his policies could stoke inflation again. During his presidential campaign, Trump said he would impose 10% to 20% tariffs on all imports, including a 60% to 100% tariff on goods from China.
Rennie warned that the tariff exemptions could force the chain to raise its prices, even if it relies on its “everyday low prices” to win over customers.
“We never want to raise prices,” Rainey said. “But there will likely be cases where prices for consumers will increase.”
About two-thirds of the products Walmart sells are made in the United States, he said.
“We’ve been in a tariff environment for seven years, so we’re very familiar with it,” Rainey told CNBC. “The tariffs, however, are inflationary for customers, so we want to work with suppliers and our own private-brand assortments to try to reduce prices.”
Trump’s transition team did not immediately respond to requests for comment.
Meanwhile, discretionary spending and an increase in home delivery helped Walmart’s third-quarter earnings.
Same-store Walmart sales rose 5.3% and same-store Sam’s Club sales rose 7%.
Visits to Walmart stores and its website — and the amount spent per visit — increased in the third quarter. US transactions increased 3.1% and average tickets increased 2.1% from last year.
E-commerce sales in the US grew 22% as more customers used Walmart’s home delivery and curbside pickup options.
Rennie said Walmart’s e-commerce division is “getting very close to profitability” as more customers pay extra fees for quick delivery within a one-hour or three-hour time frame.
Spending on holidays is expected to increase this year, although not as much as usual. Holiday spending in November and December is expected to rise 2.5% to 3.5% to between $979.5 billion and $989 billion, according to the National Retail Federation. The increase is down from a 3.9% jump last year, in which spending totaled $955.6 billion.
But Rainey said the holiday season at Walmart is off to a “very good start.”
Big ticket items like televisions, Apple AirPods, Beats headphones, and even car tires are flying off the shelves. Meanwhile, sales of warm clothing and space heaters have disappointed as parts of the country experience unseasonably warm weather.
