Walmart reported 43% e-commerce growth and U.S. same-store sales growth of 3.4% in the third quarter
Walmart Inc.’s latest results show that its heavy investment in low-price strategies and digital are paying off, analysts say.
Walmart WMT, -1.96% reported U.S. same-store sales growth of 3.4%, and 6.1% growth on a two-year stack. E-commerce sales grew 43%. Overall sales of $124.9 billion missed the FactSet consensus for $125.38 billion, but adjusted earnings per share of $1.08 beat FactSet’s guidance for $1.02.
Walmart’s focus on “everyday low prices” is coming up against the tariff threat, which the company has spoken out against.
On an early Thursday call with the media, Chief Financial Officer Brett Biggs said it’s actively working with merchants and others in preparation for the potential negative impact of tariffs. But he otherwise expressed confidence that the retail giant can handle what may come.
“We can win in any kind of environment we face,” he said.
Stifel analysts agree, writing in a Thursday note that they “continue to view Walmart’s strategy to invest in price and e-commerce favorably” because of the positive same-store sales outcome.
Stifel rates Walmart shares hold with a $105 price target. Stifel also discussed Walmart in a Tuesday note based on its proprietary consumer spending survey.
“[W]e think rising consumer prices (94% of respondents reported rising grocery prices and 76% reported rising consumer packaged goods prices) could benefit Walmart traffic in the quarter as 36% of consumers view Walmart as the lowest cost grocery provider, highest among our surveyed retailers, and indicative of the success of ongoing price investments which should allow the company to maintain its price dominance,” Stifel analysts wrote in its report.
On the digital front, Walmart has redesigned its website, expanded online grocery and taken a number of other steps to become an e-commerce leader, poised to surpass Apple Inc. AAPL, -0.68% this year, according to eMarketer data, though still well out of reach of Amazon.com Inc. AMZN, -0.77% in the top spot.
Walmart has also added a number of new brands through acquisitions, though Marc Lore, chief executive of Walmart E-Commerce U.S., said on the media call that the growth contribution from those brands is still small.
GlobalData Retail’s Managing Director Neil Saunders highlights Walmart’s online results (boosted by the strong U.S. economy) in his latest note, with a market share that has grown “in every major online category.”
“Our tracking data show a rising level of satisfaction with Walmart’s online proposition and, most pleasing, an increased level of traction with younger shoppers,” he wrote. “That said, there is more work to do here in making Walmart.com the first port of call for shoppers who are very used to defaulting to Amazon and who are increasingly locked into the ecosystem of the online behemoth.”
Still analysts were upbeat about Walmart’s results and about the holiday season ahead.
“The leveraging of its massive store network as a key driver of its prodigious online growth on a sizeable base continues at a rapid clip, with its grocery business leading this charge, and we expect the expansion of food pickup to continue to resonate with consumers for the foreseeable future, producing further market share gains in this key category,” said Charlie O’Shea, Moody’s lead retail analyst, in a comment.
Walmart shares have gained 0.8% over the last year while the Dow Jones Industrial Average DJIA, +0.83% is up 2.3% for the period.
