Walmart continued driving gains in its third quarter, getting a lift from home and other general merchandise to advance comparable sales and earnings as it sought to hold the line on pricing.
Company net income was $6.14 billion, or 77 cents per diluted share, versus $4.58 billion, or 57 cents per diluted share, in the year-previous quarter. With adjustments for one-time events included, earnings per diluted share were 62 cents versus 58 cents in the year-before period, Walmart reported.
An analyst consensus estimate published by Zacks Investment Research pinned Walmart’s third-quarter earnings per adjusted diluted share at 61 cents and revenues at $177.14 billion.
Net sales were $177.77 billion and net revenue was $179.5 billion versus $168 billion and $169.59 billion, respectively, in the year-earlier quarter, the company stated. Operating income was $6.7 billion versus $6.71 billion in the year-prior period, while operating income, including adjustments, was $7.25 billion versus $6.71 billion.
At Walmart U.S., comparable sales without the effects of fuel price volatility were up 4.5% in the quarter year over year, with transactions gaining 1.8% and average ticket 2.7%. Comps at Sam’s Club advanced 3.8% year over year, with transactions gaining 3.9% and average ticket slipping 0.1%. Net sales at Walmart U.S. were $120.68 billion and operating income was $5.78 billion versus net sales of $114.88 billion and operating income of $5.44 billion in the year-past period. At Sam’s Club, net sales were $23.55 billion and operating income was $671 million versus net sales of $22.85 billion and operating income of $634 million in the year-past quarter.
Walmart raised its full-year guidance on sales to a 4.8% to 5.1% increase from a 3.75% to 4.75% increase and adjusted earnings per share to $2.58 to $2.63 from $2.52 to $2.62.
In a conference call, Walmart President and CEO Doug McMillon said customers are still spending at a healthy rate, particularly those from middle- and upper-income households. He said Walmart is gaining upper-income customers in part based on the broader array of shopping and assortment choices the retailer offers today, given the expansion of its online business. In the conference call, John David Rainey, Walmart’s CFO, pointed out: “E-commerce sales grew 28%, led by strength in pickup and delivery and advertising.”
McMillon noted Walmart continues to work on managing costs, including those associated with tariffs, and he added the company will be strategic in where and how it raises prices. Inflation at Walmart U.S. was up 1.3% in the quarter, with food and general merchandise up in the low single digits. The company is providing a steady stream of price rollbacks to consumers who are generally interested in greater value, something particularly lower-income shoppers are trying to balance with tight budgets, McMillon said.
“At a category level, sales and general merchandise were positive, with fashion, home and automotive leading the way,” McMillon said. “Grocery performed well with good unit growth, and health and wellness was up low double digits. For Sam’s Club here in the U.S., the team delivered comp sales of 3.8% with strength across categories. The comp was driven by transaction counts, and we’re gaining market share in grocery and general merchandise. Sam’s continues to do a great job of engaging our members digitally. We have a profitable e-commerce business that outpaced our expectations again this quarter, up 22% in sales.”
He added that Walmart U.S. and Sam’s delivered strong seasonal performances for back-to-school and Halloween.
In announcing the financial performance, McMillon touched on the immediate future, including the upcoming elevation of John Furner to CEO, saying, “The team delivered another strong quarter across the business. E-commerce was a bright spot again this quarter. We’re gaining market share, improving delivery speed and managing inventory well. We’re well-positioned for a strong finish to the year and beyond that, thanks to our associates. It’s been an honor to serve them as CEO, and I’m as excited about the future of this company as I’ve ever been. John Furner is a fantastic leader with a proven track record. I couldn’t be happier for him and for Walmart.”
