Walmart Stores reported a better-than-expected increase in third quarter sales and earnings, helped by strong comps at its small format Neighborhood Market stores. However, the world’s largest retailer remained guarded in its view on fourth quarter, predicting a highly promotional holiday season in which it intends to reinforce its position as the low-price leader.
Total revenue increased by 2.9% in the three months ending October 31, to $119 billion. Net sales at U.S. Walmart stores rose 3.4% to $70 billion, despite a traffic decline of 0.7%. U.S. same-store sales edged into positive territory for the first time in the past seven quarters, edging up by 0.5% and breaking its almost two-year streak of flat to slightly declining comps. The company reported that international sales, net of currency fluctuations, increased by 1.7% to $33.7 billion. Sam’s Club net sales rose by 2.3%, and corporate global e-commerce sales grew by 21 percent.
Gross margin remained essentially flat at 25 percent. SG&A expense rose 3.5% to $23.5 billion.
Net income fell by 0.4% to $3.71 billion, or $1.15 per share, from $3.74 billion, or $1.14 per share, in the year-earlier period, but beat Wall Street estimates of $1.12 per share.
Walmart has in recent weeks announced it would cut back on plans to build more supercenters, and is instead focusing on smaller Neighborhood Market and Express stores in urban and neighborhood locations, and e-commerce. It has cut its sales plan for the year and intends to shift investment into e-commerce operations.
The holiday season will be made promotional in large part by Walmart’s own marketing strategy. Earlier this week, the retailer unveiled plans to expand Black Friday, the day after Thanksgiving, into a five-day event during which deals begin online on Thanksgiving morning, then in-store at 6 p.m. on Thanksgiving Day, lasting through Cyber Monday. On different days and times throughout the holiday, special deals will be featured on a vast array of products including electronics, jewelry, toys, home goods and apparel.