Walmart earnings beat expectations, stock spikes to new highs

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Retail giant Walmart (WMT) reported stronger-than-expected third-quarter earnings on Thursday, driven by strength in its e-commerce business. Shares are soaring to new highs.

Here were the main numbers compared to Bloomberg consensus forecasts:

  • Revenue: $127.99 billion vs. expectations of $128.67 billion

  • Adjusted EPS: $1.16 vs. expectations of $1.09

  • Walmart U.S. comp-store sales (excluding gas): 3.2% vs. expectations of 3.1%

  • Walmart U.S. e-commerce sales: up 41%

The closely followed comp sales number came in at 3.2%, versus expectations of 3.1%, driven by both customers visiting more and spending more during those visits. During the quarter, comp transactions increased 1.3% and the ticket was up 1.9%.

“We continue to see good traffic in our stores. We’re growing market share in key food and consumables categories, including fresh, and we had positive comps in general merchandise,” CEO Doug McMillon said in the management commentary.

During the third quarter, online sales in the U.S. skyrocketed 41%, driven by the big-box retailer’s online grocery business. In the U.S., Walmart now has more than 3,000 locations for grocery pick-up and more than 1,400 locations for delivery. The retailer expects to offer free same-day grocery pickup from more than 3,100 stores by the end of the year and feature same-day grocery delivery at more than 1,600 stores.

Walmart also expanded its unlimited delivery grocery membership offering “Delivery Unlimited” to 1,400 locations, and debuted InHome Delivery in three U.S. cities covering a customer base of more than 1 million.

In the management commentary, McMillon noted that the e-commerce team improved gross margins compared to a year ago “through improvements in merchandising mix” and “leveraging operating expenses.”

“We’re making progress on many fronts, but we need to do more and move faster, especially with our assortment including marketplace. I continue to challenge the team to drive a deeper, more sustainable relationship with the customer, better execute the fundamentals, and improve the overall economics of the business. Our strength is being driven by food, which is good, but we need even more progress on Walmart.com with general merchandise,” McMillon said, reiterating that Walmart is “committed to progress and building a larger, healthier eCommerce business.”

FILE - This June 25, 2019, file photo shows the entrance to a Walmart in Pittsburgh. Walmart reports its third quarter earnings on Thursday, Nov. 14. (AP Photo/Gene J. Puskar, File)
The entrance to a Walmart in Pittsburgh. Walmart reports its third quarter earnings on Thursday, Nov. 14. (AP Photo/Gene J. Puskar, File)

He added that the online grocery pick-up and delivery along with the new Unlimted Delivery and InHome Delivery offerings could help the e-commerce business “serve customers in a way that reduces friction and enhances convenience.”

“We need to translate this repetitive food and consumable volume into a stronger Walmart.com business that’s profitable over time, so that’s what we’re working on,” he added.

Walmart also raised its guidance adjusted earnings per share guidance for fiscal 2020, noting that adjusted EPS is “now expected to increase slightly” compared to a year ago.

"We're pleased with our performance for the quarter,"McMillon said in the earnings release. “Our associates are responding to change in an inspiring way, and we're proud of them.”

Shares of Walmart gained 1.56% on Wednesday to end the day at $120.98. In pre-market trading, the stock jumped more than 3% to trade at new all-time highs.


Julia La Roche is a Correspondent at Yahoo Finance. Follow her on
Twitter.

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