Walmart on Tuesday retained its title as the world’s largest retailer when it reported better-than-expected earnings, thanks to an increase in both same-store sales and footfall on its home turf.
While total revenue for the three months ended Oct. 31 fell 1.3 percent to $117.4 billion, comparable store sales in the U.S. were up for the fifth quarter in a row—registering a 1.5% increase—and traffic to its roughly 4,600 locations rose 1.7%.
International sales, however, plunged 11.4% to $29.8 billion in the third quarter (though Canada and Mexico performed well) and operating income decreased 6.4% to $1.3 billion.
E-commerce, an area that Walmart plans to pump more than $2 billion into over the next two years, showed a 10 percent increase in sales and gross merchandise volume on a constant currency basis, but the Bentonville, Arkansas-based retailer said growth was pressured by challenges in key markets overseas.
“We are pleased with the continued sales growth in Walmart U.S. and in our international business. Strong traffic and our fifth consecutive quarter of positive comps in Walmart U.S. stores show we are taking the right steps to win with customers,” said Doug McMillon, president and chief executive officer. “Although we still have work to do, we are positioning for sustainable growth through investments in people and technology to deliver a seamless shopping experience at scale.”
Despite the hefty cost of raising employee wages, adjusted earnings were $0.99 per share in the period—narrowly beating analysts’ expectations of $0.98, according to Thomson Reuters—but the company has lowered its full-year earnings per share guidance to range between $4.50 and $4.65, as well as fourth-quarter guidance of between $1.40 and $1.55 per share.
“This includes ongoing headwinds from currency, which we now expect will impact earnings per share by $0.16, compared to $0.15 from last quarter’s guidance,” explained Charles Holley, executive vice president and CFO, adding, “We continue to expect relatively flat total sales growth for the year. Without the currency impact, our full-year total net sales growth would be around 3 percent.”
Last month, Walmart’s stock dropped by nearly 9 percent in one day after executives speaking at the retailer’s annual investors meeting forecast a fall in earnings per share of between 6 and 12 percent in fiscal 2017. Following the release of its third-quarter results, shares rose about 4.5% in morning trading.