Walmart\u00a0raised its forecast on Tuesday, as its customers bought more discretionary merchandise, ordered more deliveries to their homes and started their holiday shopping.<\/p>\n
The discounter now expects net sales will grow between 4.8% and 5.1% for the full year. That compares with its previous forecast for between 3.75% and 4.75% sales growth for the period. The updated outlook came as Walmart posted third-quarter earnings and revenue that beat expectations.\u00a0<\/p>\n
In a CNBC interview, Chief Financial Officer John David Rainey\u00a0<\/strong>said sales of general merchandise \u2014 outside of the grocery department \u2014 grew year over year for the second quarter in a row after declines for 11 straight quarters. Still, he said consumers are waiting to make those purchases until they see a compelling deal, especially as they pay more for food.<\/p>\n \u201cWe\u2019re expecting this holiday period to be very consistent with that,\u201d he said. \u201cThey\u2019re focused on price and value.\u201d<\/p>\n Here is what the big-box retailer reported for the period compared with Wall Street\u2019s estimates, according to a survey of analysts by LSEG:<\/p>\n Walmart shares climbed about 3% in early trading, hitting both a 52-week high and an all-time intraday high since it began trading on the New York Stock Exchange in Aug. 1972.<\/p>\n In the three-month period that ended Oct. 31, Walmart\u2019s net income increased\u00a0<\/strong>to $4.58 billion, or 57 cents per share, compared with $453 million, or 6 cents per share,\u00a0in the year-ago period. Revenue rose from $160.80 billion in the year-ago quarter.\u00a0<\/p>\n Comparable sales, an industry metric also known as same-store sales, jumped 5.3% for Walmart and 7% at Sam\u2019s Club, excluding fuel.<\/p>\n Customers visited Walmart\u2019s stores and website in the U.S. more and tended to spend more when they did compared with the year-ago quarter. Walmart U.S. transactions rose 3.1%, and average ticket increased by 2.1% year over year.\u00a0<\/p>\n E-commerce sales rose 22% in the U.S., with gains coming from curbside pickup and home delivery, along with growth in Walmart\u2019s advertising and third-party marketplace businesses.<\/p>\n Walmart shoppers have also been willing to pay more to get their purchases faster, Rainey said. For the past two quarters, 30% of customer orders in the U.S. have come with an extra fee to get delivery within a shorter time frame, like within one hour or within three hours.<\/p>\n He said Walmart\u2019s e-commerce business is \u201cgetting very close to profitability because we\u2019re able to use some of the cost of delivery with these incremental fees that customers are willing to pay for convenience.\u201d<\/p>\n Walmart, the nation\u2019s largest retailer, delivered its latest sales results and read on U.S. consumers as investors gauge sentiment and weigh the outlook for the most crucial shopping season of the year.<\/p>\n Retailers, including Walmart, are contending with\u00a0a mixed bag of factors\u00a0this holiday season. Inflation has moderated, with gas prices declining and grocery inflation remaining low year over year. Fears of a dragged-out process to determine the winner of the U.S. presidential race never materialized.<\/p>\n Yet President-elect\u00a0Donald Trump\u2019s proposal for tariffs on imports from China and other countries has fueled\u00a0fresh concerns about prices rising\u00a0again. The holiday season is also shorter this year and parts of the U.S. have had unseasonably warm weather, two dynamics that could hurt retailers.<\/p>\n Rainey said tariffs could force Walmart to increase prices, but said it\u2019s too soon to say what merchandise may get more expensive.\u00a0<\/p>\n \u201cWe never want to raise prices,\u201d he said. \u201cOur model is everyday low prices. But there probably will be cases where prices will go up for consumers.\u201d<\/p>\n He said about two-thirds of the items that Walmart sells are made, grown or assembled in the U.S., which reduces the tariff risk for those goods. And he added that Walmart, like other retailers, has been trying to diversify where it imports goods.\u00a0<\/p>\n \u201cWe\u2019ve been living under a tariff environment for seven years, so we\u2019re pretty familiar with that,\u201d he said. \u201cTariffs, though, are inflationary for customers, so we want to work with suppliers and with our own private-brand assortment to try to bring down prices.\u201d<\/p>\n Holiday spending is expected to increase this year, but at a modest rate. The National Retail Federation, a retail trade group, said it expects holiday spending in November and December to increase 2.5% to 3.5% compared with 2023, to a range between $979.5 billion and $989 billion. That would be lower than the 3.9% year-over-year jump from the 2022 to 2023 holiday season, when spending totaled $955.6 billion.<\/p>\n Rainey said the holiday period is \u201coff to a pretty good start.\u201d\u00a0<\/p>\n He said items like TVs, Apple AirPods, Beats headphones and even tires have been selling. On the other hand, clothing and other weather-dependent purchases like space heaters have been slower because of unseasonably warm weather in parts of the country.<\/p>\n Some of the general merchandise gains indicate that consumers are feeling relief from inflation, but some also have to do with Walmart\u2019s strategy, he said. The company has deepened its assortment of toys, home goods and more through its third-party marketplace.\u00a0<\/p>\n As of Monday\u2019s close, Walmart shares are up nearly 60% this year, more than the S&P 500\u2032s approximately 24% gains during the same period. Walmart\u2019s stock closed Monday at $84.08, bringing the company\u2019s market value to $675.86 billion.<\/p>\n<\/p>\n Walmart\u00a0raised its forecast on Tuesday, as its customers bought more discretionary merchandise, ordered more deliveries to their homes and started their holiday shopping. The discounter now expects net sales will grow between 4.8% and 5.1% for the full year. That compares with its previous forecast for between 3.75% and 4.75% sales growth for the period. 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