Wal-Mart Stores (WMT) beat Wall Street expectations for the third quarter as same-store sales in the U.S. grew for the first time in seven quarters.
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The world’s largest retailer booked a profit of $3.71 billion, slightly below the year-ago period’s $3.74 billion. Per-share earnings rose a penny to $1.15 due to fewer shares outstanding. Net sales grew 2.8% to $118.1 billion. Total revenue checked in at $119 billion, up 2.9%.
Analysts were looking for earnings of $1.12 a share and net sales of about $118.3 billion.
Walmart rallied to a new all-time high Thursday, climbing 3.8% to $82.15 in recent trading. Through Wednesday’s close, the stock was up just 0.6% since the start of the year, trailing the broader S&P 500.
Although store traffic still fell 0.7% during the latest period, domestic same-store sales at Walmart locations edged 0.5% higher. Walmart, which also owns Sam’s Club, previously said it was projecting flat results.
Chief Executive Office Doug McMillon attributed the surprise improvement to strong sales at Walmart’s Neighborhood Markets stores.
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Global e-commerce sales also bolstered quarterly earnings, rising 21% on a constant-currency basis.
Sales at Walmart’s stores have been strained in recent quarters by tepid consumer spending. The retail industry as a whole is facing headwinds from stagnant wage growth, but heading into the holiday shopping season, Walmart aims to benefit from cheaper gas.
“We have some things in our favor this fourth quarter, including lower fuel prices in the U.S. and other key markets, and we're set to deliver for customers during this time,” McMillon said in a statement.
However, Walmart also warned of heavy discounting during the holidays. Chief Financial Officer Charles Holley noted the company’s guidance assumes the holiday season will be “highly promotional.”
For the fourth quarter, Walmart expects to report a profit of $1.46 to $1.56 a share. Wall Street’s consensus estimate is $1.57.
Walmart also narrowed its full-year earnings guidance to between $4.92 and $5.02 a share. Previous guidance called for earnings of $4.90 to $5.15 a share. In August, the Bentonville, Ark.-based company dampened its earnings outlook, citing higher U.S. healthcare costs than it originally expected.
Sales growth of 2% to 3% is expected this year. Last month, Walmart announced plans to boost e-commerce sales by accelerating investments in the company’s online store.