Walmart’s third-quarter profit surpassed Wall Street’s projections, and the retail giant raised its full-year guidance, showing resilience as US shoppers sought bargains amid soaring inflation.
Adjusted earnings of $1.50 (€1.49) a share surpassed the average analyst estimate of $1.32. The company raised its profit forecast for the year, suggesting it expects a healthy holiday season.
Total revenue reached $152.81 billion, up 8.7 per cent from last year. The company now expects consolidated net sales for the year to grow about 5.5 per cent, or 6.5 per cent excluding divestitures.
A shift in consumer spending away from general merchandise had left the retailer with bloated inventories, forcing it to mark down prices on items such as apparel. Chief executive Doug McMillon said the company “significantly improved its inventory pileup, quelling fears that the retailer was headed into the holiday season with too many unwanted goods. US inventory was up 12.4 per cent in the third quarter, primarily due to inflation. That compared with a 25.6 per cent increase in the second quarter.
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The improving outlook shows that Walmart is confident that US shoppers will still spend robustly during the holidays after contending this year with the highest inflation rates in four decades. Walmart’s grocery business is also getting a boost as the company’s reputation for low prices entices shoppers contending with high inflation.
“Walmart US continued to gain market share in grocery, helped by unit growth in our food business,” McMillon said in a statement.
The company said it’s also benefiting from higher-end shoppers who are trading down to Walmart. Transactions rose 2.1 per cent, twice the gains from the previous quarter.
Walmart is growing its share of shoppers “in every income bracket, demonstrating that everyone is looking to lower costs, even if it’s on everyday items, said Neil Saunders, managing director at GlobalData.
Walmart shares leaped 7.2 per cent in early trading. The shares had dropped 4.4 per cent this year through Monday’s close. – Bloomberg
