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%.<\/li>\n<\/ul>\nDive Insight:<\/h3>\n
Walmart customers continue to make trade-offs \u201cto be able to afford the things they want, given the sustained high cost of the things they need,\u201d CFO John David Rainey told investors and analysts during an earnings call.<\/p>\n
Nevertheless, Walmart \u201cdemonstrated strong 3Q results across the board, with its top- and bottom-line beating Street estimates,\u201d analysts with Jefferies, led by Corey Tarlowe, said in a note. \u201cWe believe [Walmart] is well-positioned ahead to witness continued strength in the upcoming holiday season and continue to gain share.\u201d<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.\u00a0<\/p>\n
\u201cAs 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,\u201d Rainey said.\u00a0<\/p>\n
\u201cRecently, 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,\u201d Rainey continued.\u00a0<\/p>\n
Walmart\u2019s Q3 growth in e-commerce is \u201cimpressive,\u201d Neil Saunders, managing director of GlobalData, said in emailed comments. \u201cIn our view, Walmart has made very serious inroads on the online grocery front and has built a strong reputation for reliability,\u201d Saunders said. \u201cIt is also making progress in online general merchandise thanks to its expanded marketplace.\u201d<\/p>\n
Walmart also invested in a substantial store renovation program, which is resonating with customers, Saunders said. \u201cWe have visited some converted formats and are impressed by the elevation of the general merchandise proposition, especially in home and apparel,\u201d Saunders said. \u201cThis 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.\u201d\u00a0<\/p>\n
Company leaders said sales during November have turned higher as the weather shifted and the holiday season began. As a result of \u201csomewhat uneven\u201d sales, Walmart is thinking \u201cslightly more cautiously about the consumer versus 90 days ago,\u201d Rainey said.<\/p>\n
Looking ahead, \u201cwe 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,\u201d Rainey said.<\/p>\n<\/p><\/div>\n
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