Global retail giant Walmart is more upbeat about earnings for the year, despite tamping down expectations just a month ago, after posting sales growth across all its business lines and most regions on Thursday. The company has been buffeted by investments and sell-offs as it tries to position the chain to compete in the changing and competitive retail and ecommerce sector.
"Each of our segments achieved solid sales growth," Walmart chief Doug McMillon said. Just a month ago the retailer trimmed its profit forecast for the year, but with improving sales and increased traffic in its stores, the company said total revenue jumped 1.4 percent in the third quarter to $124.9 billion.
At the same time, the key metric of comparable store sales - those at existing outlets rather than new stores - rose 3.4 percent in the US, as customer traffic rose 1.2 percent in the three months ended October 26. The solid sales growth pushed the closely-watched earnings per share measure to $1.08 in latest quarter, beating expectations.
And the company raised its estimate of fiscal year 2019 EPS by 10 cents to $4.75 to $4.85, just a few weeks after lowering the estimate following the acquisition of India's online retailer Flipkart. Company executives said the investment, like others in ecommerce, home grocery delivery and curbside pickup, have been key to keep the store competitive. The chain now has 2,100 grocery pickup locations and is increasing delivery options so that "by the end of the year we'll cover about 40 percent of the population with delivery through about 800 stores."
In addition, the chain saw sales growth "in nine of our 10 markets, including our four largest markets: Mexico, China, Canada and UK," according to the statement. Walmex in Mexico led the way with an increase of 5.4 percent in the quarter, while sales in China rose 2.2 percent.
Investors seemed to be cheering the news initially, but by midday Walmart shares had retreated 2.2 percent making it one of the biggest losers in the benchmark Dow Jones Industrial Average. Chief financial officer Brett Biggs told reporters the US-China trade tensions with steep tariffs on $250 billion in Chinese goods is something the firm "will manage through," regardless of what happens.
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