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Walmart’s U.S. stores continue sales growth in Q3

Online business booms as omnichannel strategy bears fruit

Russell Redman

November 15, 2018

4 Min Read
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Energized in part by e-commerce growth, Walmart turned in another quarter of solid sales gains at its U.S. stores, despite a dip in comparable-store sales at Sam’s Club.

Third-quarter adjusted net earnings per share (EPS), meanwhile, topped Wall Street’s forecast and excluded an unrealized loss on Walmart’s equity investment in Chinese e-tailer JD.com and a charge related to the sale of a majority stake in Walmart Brazil.

Walmart said Thursday that for the fiscal 2019 quarter ended Oct. 31, total revenue edged up 1.4% to $124.9 billion from $123.2 billion a year earlier. In constant currency, revenue totaled $126.1 billion, up 2.4% from $123.2 billion in the fiscal 2018 quarter.

“We’re pleased with the overall results we posted for the third quarter. We continue to see strong comp-store sales. Our results reflect not only value our customers are finding in our offer, and a lot of hard work from the team, but certainly some macro tailwinds as well, especially in the U.S.,” Walmart President and CEO Doug McMillon told analysts in a conference call. “Each of our segments achieved solid sales growth,” he added.

At Walmart U.S., sales for the third quarter came in at $80.6 billion, a 3.7% gain from $77.7 billion a year ago. Comp-store sales excluding fuel rose 3.4% year over year (3.5% with gasoline sales), with same-store increases of 1.2% in traffic and 2.2% in ticket size. E-commerce sales were up 140 basis points, compared with an 80-basis-point gain in the prior-year period, the Bentonville, Ark.-based retail giant reported.

Related:Sam’s Club readies new high-tech store in Dallas

McMillon noted that Walmart U.S. e-commerce sales jumped 43% sequentially for the quarter.

“We continue to expand our reach from an omnichannel perspective. We now have nearly 2,100 grocery pickup locations, and we’ll have about 700 pickup towers by the end of this fiscal year,” he said. “Grocery pickup has consistently delivered one of the highest Net Promotor Scores we’ve ever had, and that continued throughout the aggressive rollout in Q3. As we’ve learned to do pickup well, it has unlocked our ability to provide delivery. We’re moving quickly on this front as well, and by the end of the year we’ll cover about 40% of the population with delivery through about 800 stores.”

Walmart International sales decreased 2.6% to $28.8 billion but in constant currency were up 1.6% for $30 billion. According to McMillon, “good results in food” helped propel a 2.5% same-store sales increase in Canada.

“We see meaningful price gaps to competitors and, according to Nielsen, we gained market share in certain categories, including fresh foods,” he said of Walmart Canada’s third-quarter performance. “In e-commerce, we delivered net sales growth of greater than 20%, increased the number of SKUs available on marketplace and added new stores that offer online grocery. We also opened a new dedicated fulfillment center that will provide capacity to manage growth as well as to better manage costs.”

Related:High-tech distribution center coming from Walmart

Net sales at Sam’s Club fell 2.3% in the third quarter to $14.5 billion from $14.9 billion a year earlier. Same-store sales, however, climbed 3.2% excluding fuel (5.3% with gasoline) and reflected 6.2% growth in traffic partially offset by a 3% decline in ticket size. E-commerce sales increased by 130 basis points versus a year-ago gain of 80 basis points. Membership income rose 1.6%.

“At Sam’s Club, we saw strong comp-sales growth aided by a strengthened value proposition as we invest in price and improve our assortment,” McMillon said, adding that same-store results benefited from the transfer of sales from closed clubs and 32% sales growth in e-commerce. “The grocery, fresh and consumables categories all performed well, and the penetration of our Member’s Mark brand increased approximately 90 basis points over last year. I’m especially pleased with the performance in fresh. This is an important category for our target member and a key traffic driver for us.”

Results at Walmart U.S. and Sam’s Club cover the 13 weeks ended Oct. 26.

On the earnings side, Walmart totaled third-quarter net income of $1.71 billion (GAAP), or 58 cents per diluted share, compared with $1.75 billion, or 58 cents per diluted share, a year ago.

The company said the results include a 48 cents-per-share unrealized loss from its JD.com investment; a 3 cents-per-share charge for foreign currency on closing the sale of the Walmart Brazil stake; and a 1 cent-per-share benefit from an adjustment related to tax reform. Adjusted EPS was $1.08 for the quarter.

Analysts, on average, projected adjusted EPS of $1.01, with estimates ranging from a low of 93 cents to a high of $1.09, according to Thomson Reuters.

Looking ahead, Walmart pruned its fiscal 2019 GAAP earnings guidance to between $2.26 and $2.36 per share (including the impacts of the JD.com unrealized loss, Walmart Brazil stake sale and tax reform adjustment), compared with its previous outlook of $2.65 to $2.80. However, the retailer lifted its adjusted EPS projection to between $4.75 and $4.85 from its earlier guidance of $4.65 to $4.80.

Chief Financial Officer Brett Biggs reported that Walmart also has higher expectations for full-year same-store sales. “Given the strong Q3 performance and our expectations for the fourth quarter, we are raising our guidance for Walmart U.S. comp sales, excluding fuel, from ‘around 3%’ to at least 3% growth for the year,” he said in the call with analysts.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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