Walmart Builds Solid Q3

While net income fell, Walmart posted a solid third quarter, with sales and comps edging up and the retailer beating Wall Street expectations.

For the third quarter ended October 31, Walmart posted net income of $3.03 billion, or 98 cents per diluted share, compared with $3.3 billion, or $1.03 per diluted share, in the year-before period. Walmart beat a MarketBeat-published analyst average estimate of 96 cents.

Walmart U.S. net sales were $74.55 billion versus $72.71 billion in the year-earlier period. Comparable store sales increased 1.2%, driven by a traffic increase of 0.7% and an average ticket increase of 0.5%. The company pointed out that all store formats operated by the division comped positive in the quarter with Neighborhood Market comparable sales increasing by 5.2%.

Sam’s Club net sales were $14.24 billion versus $14.08 billion in the previous-year quarter, with comps up 1.4% on a strong ticket increase as traffic slipped 0.5%. In the third quarter, Sam’s rolled out Scan and Go, a mobile checkout and payment system, nationwide. With Scan and Go, Sam’s members can skip the line at the check stand.

Total revenues were $118.18 billion versus $117.41 billion in the year-earlier quarter while net sales were $117.18 billion versus $116.6 billion in the period a year prior. Currency fluctuation effects drove total revenues down by $2.1 billion. Operating income was $5.12 billion versus $5.71 billion in the quarter the year prior, a 10.4% decrease. Investments in employees and technology as well as currency exchange rate fluctuations negatively impacted operating income, Walmart maintained. Excluding last year’s lease accounting benefit of $156 million, operating income slipped 7.9%.

Worldwide, e-commerce sales increased 20.6% representing continued acceleration. E-commerce contributed about 50 basis points to the Walmart U.S. comp and about 60 basis points to the Sam’s Club comp. In a conference call on third quarter returns, Doug McMillon, Wal-Mart Stores president and CEO, said that U.S. e-commerce results were stronger than those in key international markets, driven by the marketplace operation and a contribution from recently acquired Jet.com. Walmart U.S. continues rolling out online grocery and expanding its pick up service in stores and clubs, he added.

“We had a solid third quarter,” McMillon said. “Our e-commerce growth accelerated, operations in the U.S. continued to strengthen and international delivered another solid performance. We are pleased that we can see real progress stemming from our strategic choices, and we appreciate the great work by our associates. Yet, we are not satisfied. We will continue to change and pick up speed to reach our longer term aspirations.”

Walmart operates 11,593 retail locations under 63 banners in 28 countries as well as e-commerce websites in 11 countries.