The Walmart logo is seen outside one of its stores in Selinsgrove, Pennsylvania.
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Walmart raised its forecast on Tuesday, as customers bought more merchandise, ordered more home deliveries and began holiday shopping.
Discount now expects net sales to grow between 4.8% and 5.1% for the year. That compares with previous forecasts of between 3.75% and 4.75% sales growth for the period. The updated outlook comes as Walmart posted third-quarter earnings and revenue that beat expectations.
In a CNBC interview, Chief Financial Officer John David Rainey said sales of general goods – outside the grocery department – increased year over year for the second quarter in a row after declining for 11 straight quarters. However, he said that consumers are waiting to buy until they see an attractive deal, especially when it comes to paying for food.
“We expect this holiday period to be very consistent,” he said. “They focus on price and value.”
Here’s what big-box retailers reported for the period compared to Wall Street estimates, according to a survey of analysts by LSEG:
- Earnings per share: 58 cents adjusted vs 53 cents expected
- result: $169.59 billion vs $167.72 billion expected
Walmart shares rose about 3% in early trading, hitting a 52-week high and an all-time intraday high since trading on the New York Stock Exchange in August 1972.
In the three-month period ended Oct. 31, Walmart’s net income increased to $4.58 billion, or 57 cents per share, compared with $453 million, or 6 cents per share, in the year-ago period. Revenue increased from $160.80 billion in the year-ago quarter.
Comparable sales, an industry metric also known as same-store sales, rose 5.3% for Walmart and 7% at Sam’s Club, excluding fuel.
Customers are visiting Walmart stores and websites in the US more and tend to spend more when compared to last year’s quarter. US Walmart transactions rose 3.1%, and average tickets rose 2.1% year-over-year.
E-commerce sales rose 22% in the US, with revenue from pickup and home delivery, as well as growth in Walmart’s advertising and third-party marketplace businesses.
Walmart shoppers are also willing to pay more to make purchases faster, Rainey said. For the past two quarters, 30% of customer orders in the US came with an additional fee to get delivery in a shorter time, such as within one hour or three hours.
He said that Walmart’s e-commerce business “is very close to profitability because we can use some of the delivery costs with these additional costs that customers are willing to pay for convenience.”
Walmart, the nation’s largest retailer, posted its latest sales results and read on U.S. consumers as investors gauged sentiment and weighed the outlook for the year’s most important shopping season.
Retailers, including Walmart, are contending with multiple factors this holiday season. Inflation has moderated, with gas prices falling and grocery inflation remaining low year over year. Fears of a drawn-out process to determine the winner of the US presidential race never materialized.
But President Donald Trump’s proposal for tariffs on imports from China and other countries has fueled renewed concerns about rising prices again. The holiday season is also shorter this year and parts of the U.S. have unseasonably warm weather, two dynamics that could impact retailers.
Rainey said the tariffs could force Walmart to increase prices, but said it’s too soon to say whether merchandise could become more expensive.
“We don’t want to raise prices,” he said. “Our model is every day low cost.
He said about two-thirds of the goods Walmart sells are made, grown or assembled in the U.S., which reduces the risk of tariffs on those goods. And he added that Walmart, like other retailers, has tried to diversify where it imports goods.
“We’ve lived in a tariff environment for seven years, so we’re familiar with it,” he said. “Rates, however, are inflationary for our customers, so we want to work with our suppliers and various private brands to try to reduce prices.”
Holiday spending is expected to increase this year, but at a modest rate. The National Retail Federation, a retail trade group, said that holiday spending in November and December will increase 2.5% to 3.5% compared to 2023, to a range of $979.5 billion and $989 billion. This would be lower than the annual jump of 3.9% from the 2022 to 2023 holiday season, when spending was $955.6 billion.
Rainey said the holidays are “off to a good start.”
They say things like TVs, Apple AirPods, Beats headphones and even tires have sold out. On the other hand, clothing and weather-dependent purchases like space heaters are slower due to the unseasonably warm weather in these parts of the country.
Some of the general merchandise gains indicate that consumers are feeling some relief from inflation, but some also have to do with Walmart’s strategy, he said. The company has expanded its range of toys, home goods and more through third-party marketplaces.
As of Monday, Walmart shares are up nearly 60% this year, outpacing the S&P 500’s roughly 24% over the same period. Walmart stock closed Friday at $84.08, bringing the company’s market value to $675.86 billion.
