Walmart, Inc. raised its guidance for the year as third-quarter results topped expectations with help of strong double-digit e-commerce growth. Revenues reached $179.5 million versus analysts’ consensus estimate had been $177.14 billion.  Adjusted EPS of 62 cents compared with the consensus estimate of 61 cents.

Third Quarter Highlights

  • Revenue of $179.5 billion, up 5.8 percent, or 6.0 percent (cc)
  • Global eCommerce sales grew 27 percent, led by store-fulfilled pickup & delivery and marketplace
  • Global advertising business up 53 percent, including VIZIO; Walmart Connect in the U.S. up 33 percent
  • Membership and other income up 9.0 percent, including 16.7 percent growth in membership income
  • Gross margin rate up 2 bps, led by Walmart U.S, partially offset by International due to the timing of Flipkart’s Big Billion Days event
  • Operating income decreased 0.2 percent, primarily due to a non-cash share-based compensation charge at PhonePe in anticipation of a potential IPO; adjusted operating income up 8.0 percent (cc)
  • Adjusted EPS of 62 cents a share excludes the effect, net of tax, of 20 cents a share gain on equity and other investments and $0.02 related to settlement of a certain legal matter, partially offset by 7 cents a share of incremental share-based compensation expense at PhonePe
  • ROA at 8.4 percent; ROI at 14.8 percent, negatively affected approximately 30 bps from discrete items in the comparative trailing twelve month periods, including 25 bps from charge at PhonePe

“The team delivered another strong quarter across the business. eCommerce was a bright spot again this quarter. We’re gaining market share, improving delivery speed, and managing inventory well. We’re well-positioned for a strong finish to the year and beyond that, thanks to our associates. It’s been an honor to serve them as CEO, and I’m as excited about the future of this company as I’ve ever been. John Furner is a fantastic leader with a proven track record. I couldn’t be happier for him and for Walmart,” said Doug McMillon President and CEO, Walmart.

Walmart U.S.

  • Strong sales growth led by momentum in eCommerce; share gains across grocery, health & wellness and general merchandise categories; customer value proposition with everyday low prices and increased convenience is resonating
  • eCommerce sales accelerated with 28 percent growth reflecting strength in store-fulfilled delivery, advertising and marketplace; sales through expedited store-fulfilled delivery channels grew nearly 70 percent
  • Strong advertising growth continued, including a 33 percent increase in Walmart Connect sales (ex-VIZIO)
  • Gross profit rate increased 19 bps; membership income grew double-digits; operating expense deleveraged 15 bps
  • Operating income grew faster than sales, up 6.3 percent, reflecting strong inventory management and improved eCommerce economics, aided by continued improvement in business mix
  • Inventory increased 2.6 percent, approximately half the rate of sales growth, while maintaining healthy in-stock levels


Walmart International

  • Growth in net sales (cc)1 led by Flipkart, China, and Walmex; transaction counts & unit volumes up across markets
  • Strong growth from both stores and eCommerce; continued momentum across all categories • eCommerce sales up 26 percent, led by marketplace and store-fulfilled pickup & delivery; digital mix up across markets
  • Timing of Flipkart’s Big Billion Days (“BBD”) event benefited sales growth in Q3 and will negatively affect Q4 growth
  • Advertising business3 grew 34 percent, led by Flipkart, benefited by BBD timing
  • Operating income affected by $0.7 billion share-based compensation charge at PhonePe in advance of potential IPO
  • Adjusted operating income growth (cc)1 across markets; benefited by lower losses in eCommerce


Sam’s Club U.S.

Sales strength led by grocery and general merchandise with continued share gains • Comp sales driven by increased transactions and unit volumes ◦ Prior year comp sales reflect a ~120 bps positive impact from port disruptions • eCommerce sales up 22 percent with continued strong growth in club-fulfilled pickup & delivery • Membership income grew 7.1 percent with steady growth in member counts, renewal rates, and Plus members


Guidance

Image courtesy Walmart