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Wal-Mart Tops Earnings Estimates After Traffic, E-Commerce Grows

Published on Nov 17 2016 2:00 PM in Retail tagged: Retail / E-Commerce / Wal-Mart / growth

Wal-Mart Tops Earnings Estimates After Traffic, E-Commerce Grows

Wal-Mart Stores Inc. topped third-quarter earnings estimates and boosted its annual forecast, a sign the world’s largest retailer is benefiting from its push to expand e-commerce and improve its stores.

Profit was 98 cents a share in the third quarter, which ended October 31, the company said in a statement Thursday. Analysts estimated about 96 cents, according to data compiled by Bloomberg.

Customer traffic and a surge in online sales helped fuel the results, which bode well for the all-important holiday season. CEO Doug McMillon has been pushing to lower Wal-Mart’s prices, clean up stores and take better care of customers. The company also acquired web startup Jet.com for about $3 billion in September, giving a jolt to an e-commerce division that had begun to flag.

“We are going into the holidays in a really good position from a momentum standpoint,” CFO Brett Biggs said in an interview.

Wal-Mart shares climbed 16% this year through Wednesday’s close, lifted by its improving performance. That outpaced the 6.5% gain of the Standard & Poor’s 500 Index.

Chasing Amazon

Since taking the helm in 2014, McMillon has boosted pay for U.S. workers, tried to improve Wal-Mart’s grocery offering and spent billions on its online operations -- aiming to gain ground on Amazon.com Inc. Sales at U.S. stores open more than 12 months rose 1.2% in the quarter, just shy of the 1.3% predicted by analysts.

Total revenue increased 0.7% to $118.2 billion. Overseas, the strong dollar weighed on sales, turning a 2.4% increase at its international unit into a 4.8% decline.

Wal-Mart also raised the lower end of its forecast of the year. The Bentonville, Arkansas-based company now expects annual earnings of $4.20 to $4.35 a share, excluding some items. It had previously set the bottom of the range at $4.15.

Wal-Mart’s online business increased 21% last quarter, an acceleration from the 12% gain in the second quarter. E-commerce sales growth had been slowing, and Wal-Mart has been trying to shore up the business. The Jet.com deal gave Wal-Mart access to the startup’s technology and management, as well as contributing more than a month worth of its sales to the retailer’s third quarter.

“E-commerce was a highlight,” Biggs said. “We expect to continue seeing that momentum.”

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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