Shares for Walmart were up 8.13% on Tuesday morning following better-than-expected earnings in the third quarter and the retailer’s boost to its full year guidance.
The Bentonville, Ark.-based big-box retailer reported total revenue in the third quarter of $152.8 billion, up 8.7% from the same time last year. The retailer credits most of this growth to its Walmart U.S. and Sam’s Club U.S. businesses driven by gaining market share in grocery sales as many shoppers have turned to the company as inflation mounts.
Walmart U.S. comp sales grew 8.2% with e-commerce growing 16% in the segment in Q3. Sam’s Club U.S. comp sales increasing 10%. And Walmart International net sales were $25.3 billion, an increase of $1.7 billion, led by double-digit growth in its Walmex division.
On its earnings call on Tuesday, Walmart president and CEO Doug McMillion also said the company has “significantly improved” its inventory position in the third quarter after several quarters of excess merchandise levels resulting in billions of orders being canceled in Q2.
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“Globally, inventory is up 13% for the quarter, including 12.4% for Walmart U.S., which is down from just over 26% in Q2, and 2.5% for International,” McMillion told investors on the call. “Inflation drives the majority of the increase rather than units. In-stock on replenishable items and active management of seasonal item quantities and sell-throughs are the priorities. We expect this progress to continue through the fourth quarter and that will end the year in even better shape.”
Going even further, president and CEO of Walmart U.S. John Furner told investors that most of the excess inventory that was stuck in the supply chain is now in stores and the company is working on moving through the product and remains in a good in-stock position for the holiday season. Furner did note, however that inventory remained high in apparel and other general merchandise levels.
Looking ahead, Walmart is raising its full-year guidance following its Q3 performance. It now expects consolidated net sales growth of about 5.5%, including comp sales growth of 5.5% for Walmart U.S.
“This quarter demonstrates, again, that we can navigate short-term challenges and build for the long term simultaneously,” McMillion said. “When times are good, we have room to grow. When things are more difficult, we sell things people want and need at a value and in ways they want to shop. And with new levers for growth across our flywheel, we’re becoming even stronger and more resilient.”
