Shoppers are still flocking to Walmart, but America’s largest retailer is being cautious about its future amid an uncertain macroeconomic backdrop.
Walmart reported revenue of $160.8 billion in its third-quarter earnings results Thursday morning. Total revenue was up 5.2% from last year, and exceeded expectations at $159.13 billion. Its U.S. same-store sales rose 4.7%, better than the expected 3.35%.
Adjusted earnings per share came in at $1.53 versus estimates of $1.52, one percent higher.
Foot traffic increased by 3.40%, higher than the expected 1.50%. Ticket size increased 1.5%, less than the expected 2.08%.
Despite the decline in earnings, Walmart gave soft guidance for the rest of the year. It raised its full-year EPS to $6.40 to $6.48, higher than its previous guidance of $6.36 to $6.46, but below the expected $6.48.
Shares fell 6% in premarket trading after the report.
CFO John Rennie said, “Recently, we have experienced a high level of variability and weekly performance amid holiday events in the US, which saw softness in the latter part of October, which was lower than the rest of the quarter. ” A call with investors.
Rennie said the uneven sales numbers give retailers reason to be more cautious about consumer conditions. Walmart expects sales growth to remain slow in the fourth quarter as grocery price inflation slows, but “we are encouraged by the increased traffic and share gains we have seen and expect,” Rainey said.
Some of the factors driving sales growth include e-commerce, grocery and pharmacy sales.
E-commerce sales in the US grew 24% due to increased pickup and delivery orders.
Its grocery division continues to perform well as American consumers look for value, despite headwinds like high interest rates, ongoing inflation hitting their wallets.
The category grew in the mid-single digits as consumers bought more food – including its private label options – as well as more personal care products and pet supplies.
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According to Walmart’s release, its health and wellness unit saw a sales jump in the high-teens due to an increase in “script numbers, a higher mix of branded versus generic prescriptions, strength in vaccinations and branded drug inflation.”
General merchandise saw low-single digit growth as fewer people bought discretionary items like apparel, home decor and toys.
Inventory in the US declined 5%, an issue that attracted a lot of attention last year when retailers held too much stock.
Rival Target (TGT) has seen a slowdown in consumer spending, but not as bad as Wall Street expected when it reported its earnings results on Wednesday.
Walmart Store of the Future: Customers Shopping (Courtesy: Walmart)
“I think what’s encouraging is that our traffic, our transaction numbers remained strong and consistent throughout the quarter,” Walmart CEO Doug McMillon said in late October, citing a change in spending as a possible reason. Pointed to unusual weather.
Walmart recently announced a $9 billion store improvement initiative in the US.
In Q3, its operating expenses as a share of net sales increased by 35 basis points. The company remodelled 233 stores last quarter, out of which 494 have been remodelled so far.
The company has also announced significant changes in salaries this year. The company said “higher salary-related costs” and legal expenses had impacted its operating expenses.
This story is breaking and being updated.
Brooke DePalma is a senior reporter at Yahoo Finance. Follow him on Twitter @Brookdipalma Or email him at [email protected].
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