Walmart Approaches Holidays After Strong Q3

As Walmart prepared in stores and online for the upcoming holiday season, the retailer posted a strong third quarter, with both net income and sales growth as well as the Walmart U.S. division in particular recording a solid performance.

The retailer reported net income of $3.29 billion, or $1.15 per diluted share, versus $1.71 billion, or 58 cents per diluted share, in the quarter a year earlier. Adjusted for one-time charges, earnings per share was $1.16 versus $1.08 in the year-prior quarter. Third quarter adjusted diluted earnings per share topped a MarketBeat-published analyst average estimate of $1.09.

Walmart’s third quarter total revenues increased by 2.5% to $128 billion as net sales also gained 2.5% to $127 billion. In the quarter a year before, revenues and sales came in at $124.9 billion and $123.9 billion, respectively. Operating income was $4.72 billion versus $4.99 billion in the year-previous quarter.

At Walmart U.S., net sales advanced 3.2% to $83.2 billion while operating income increased 6.1% to $4.2 billion versus the year-earlier quarter. Comparable sales, excluding fuel price effects, gained 3.2%, with transactions up 1.3% and ticket up 1.9%, in the quarter year over year. The e-commerce contribution was 170 basis points as compared to 140 basis points in the quarter last year.

At Sam’s Club, net sales increased 0.7% without fuel related effects to $14.6 billion while operating income declined 13.7% to $300 million versus the year-earlier quarter. Comparable sales excluding fuel price effects increased 0.6%, with transactions up 5.7% and ticket down 5.1% in the quarter year over year. The e-commerce contribution was 170 basis points, up from 130 basis points in the quarter last year.

Doug McMillon, Walmart president and CEO, said highlights in the period included the announced rollout of Delivery Unlimited, the company’s grocery delivery membership option to1,400 stores in the U.S.; the launch of InHome Delivery service in Kansas City, Pittsburgh and Vero Beach, FL; the opening of the first-ever Walmart Health center in Dallas, GA; and record sales at Flipkart during the India e-commerce operator’s Big Billion Days sales event.

Walmart has increased market share in key food and consumables categories, McMillon added, and had positive comps in general merchandise. Comp sales growth of 3.2%, along with good expense management, helped the company leverage SG&A, particularly in physical stores, even as it made investments in price, leading to operating income growth for the sixth consecutive quarter, the company noted.

McMillon noted that Walmart has kicked off its U.S. holiday initiative with an integrated plan in stores and online. Walmart.com customers will find great prices on top items in electronics, gaming, toys and home, among others, according to the company. In stores, Walmart has expanded Check Out with Me and the DotCom Store services to all supercenters as a way to shorten checkout wait times, according to McMillon.