Global retail giant Walmart Inc is more upbeat about earnings for the year, despite tamping down expectations just a month ago, after posting sales growth across all its business lines and most regions on Thursday.
The company has been buffeted by investments and sell-offs as it tries to position the chain to compete in the changing and competitive retail and e-commerce sector.
“Each of our segments achieved solid sales growth,” Walmart chief executive officer Doug McMillon said.
Just a month ago the retailer trimmed its profit forecast for the year, but with improving sales and increased traffic in its stores, the company said total revenue had jumped 1.4 percent in the third quarter to US$124.9 billion.
At the same time, the key metric of comparable store sales — those at existing outlets rather than new stores — rose 3.4 percent in the US, as customer traffic rose 1.2 percent in the three months that ended on Oct. 26.
‘STRONG POSITION’
“Overall, we’re encouraged by the momentum in our business and excited to be in a strong position to invest for the future as prior investments pay back,” McMillon said in a statement.
The solid sales growth pushed the closely watched earnings per share measure to US$1.08 in the latest quarter, beating expectations.
FLIPKART ACQUISITION
The company also raised its estimate of fiscal year 2019 earnings per share by US$0.10 to US$4.85, just a few weeks after lowering the estimate, following the acquisition of India’s online retailer Flipkart.
Company executives said the investment, like others in e-commerce, home grocery delivery and curbside pickup, had been key to keeping the store competitive.
The chain now has 2,100 grocery pickup locations and is increasing delivery options so that “by the end of the year we’ll cover about 40 percent of the population with delivery through about 800 stores.”
In addition, the chain saw sales growth “in nine of our 10 markets, including our four largest markets: Mexico, China, Canada and UK,” the statement said.
Walmex in Mexico led the way with an increase of 5.4 percent in the quarter, while sales in China rose 2.2 percent.
INVESTOR SENTIMENT
However, investors seemed unimpressed and Walmart shares retreated 2 percent by the close, making it one of the biggest losers in the benchmark Dow Jones Industrial Average.
Chief financial officer Brett Biggs told reporters that the US-China trade tensions with steep tariffs on US$250 billion in Chinese goods is something the firm “will manage through,” regardless of what happens.
The prospect that US tariffs on Chinese goods would increase in January to 25 percent was “not positive,” since prices would go up, Biggs said, adding that the chain would prefer to see a resolution.
However, he said consumers continued to be in “good shape” going into the holiday shopping season.
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