Saturday , 2 March 2024
Home Brands Walmart thinking ‘more cautiously’ about the consumer amid volatile sales trends
Brands

Walmart thinking ‘more cautiously’ about the consumer amid volatile sales trends


This audio is auto-generated. Please let us know if you have feedback.

Dive Brief:

  • Walmart’s third-quarter global revenue rose to $160.8 billion, up 5.2% from last year, the company said in a Thursday earnings announcement. E-commerce for Walmart’s U.S. segment rose 24%, led by pickup and delivery. E-commerce rose 16% for Sam’s Club and was up 15% globally.
  • Comparable sales rose 4.9% for Walmart U.S. and net sales rose 4.4% to $109.4 billion, but operating income fell 2.2% to $5 billion. That was below guidance due to higher-than-expected expenses, executives said on a call with analysts.
  • Walmart raised its full-year consolidated net sales guidance to a range of 5% to 5.5%, up from 4% to 4.5%. For consolidated operating income, Walmart is maintaining guidance of growth ranging from 7% to 7.5%.

Dive Insight:

Walmart customers continue to make trade-offs “to be able to afford the things they want, given the sustained high cost of the things they need,” CFO John David Rainey told investors and analysts during an earnings call.

Nevertheless, Walmart “demonstrated strong 3Q results across the board, with its top- and bottom-line beating Street estimates,” analysts with Jefferies, led by Corey Tarlowe, said in a note. “We believe [Walmart] is well-positioned ahead to witness continued strength in the upcoming holiday season and continue to gain share.”

Walmart executives noted that its e-commerce segment continues to perform well. The company continues to make investments in its supply chain and fulfillment infrastructure.

Rainey said Walmart opened its third next-generation e-commerce fulfillment center in the last quarter. The facilities, which are about 1.5 million square feet each, are expected to more than double the number of customer orders fulfilled daily and will expand next- and two-day shipping to nearly 90% of the U.S., including marketplace items shipped by Walmart fulfillment services.

In addition, the company expects to have seven stores with automated market fulfillment centers operational by the end of this month, executives said during the call. The centers stock thousands of the most popular items and their presence in the supply and fulfillment chain will increase order capacity, productivity and inventory accuracy. 

“As we focus on improving e-commerce margins, we’re making good progress in lowering digital fulfillment costs and densifying the last mile by tapping our broad store and club network,” Rainey said. 

“Recently, we’ve experienced a higher degree of variability in weekly performance in between holiday events in the U.S., including seeing a softening in the back half of October, that was off-trend to the rest of the quarter,” Rainey continued. 

Walmart’s Q3 growth in e-commerce is “impressive,” Neil Saunders, managing director of GlobalData, said in emailed comments. “In our view, Walmart has made very serious inroads on the online grocery front and has built a strong reputation for reliability,” Saunders said. “It is also making progress in online general merchandise thanks to its expanded marketplace.”

Walmart also invested in a substantial store renovation program, which is resonating with customers, Saunders said. “We have visited some converted formats and are impressed by the elevation of the general merchandise proposition, especially in home and apparel,” Saunders said. “This should help convert more new shoppers and will stand Walmart in good stead with core shoppers once the economy starts to improve and their spending power improves.” 

Company leaders said sales during November have turned higher as the weather shifted and the holiday season began. As a result of “somewhat uneven” sales, Walmart is thinking “slightly more cautiously about the consumer versus 90 days ago,” Rainey said.

Looking ahead, “we expect the relationship between profit and sales growth to favor profitability in Q4 and for the full year to align with our goal of operating income growing faster than sales,” Rainey said.



Source link

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles

Brands

Yohji Yamamoto Men’s Fall 2024

In an industry that’s all about speed, youth and the new, new...

Brands

Why Priscilla Presley’s ’60s Makeup Is Popular Again

Priscila Presley, who became known for her marriage to Elvis Presley and...

Brands

Lazoschmidl Men’s Fall 2024

Josef Lazo and Andreas Schmidl chose to look back at their early,...

Brands

Ariana Madix & More Fashion at ‘Vanderpump Rules’ Season 11 Premiere

Following last season’s shocking “Scandoval,” Bravo’s “Vanderpump Rules” returns for an 11th...