Walmart, the country’s largest food retailer, continued to see strong share gains in grocery during its third quarter, raising its financial forecast on Thursday for the 2024 fiscal year.
The retail giant’s U.S. comparable-store sales increased 4.9% for the quarter ended Oct. 31 and the company posted consolidated revenue of $160.8 billion, up 5.2%.
Walmart’s same-store sales growth was driven by a 3.4% increase in transactions and a 1.5% increase in average ticket, down significantly from the 6% inflationary ticket lift seen during the period last year.
Walmart’s U.S. e-commerce sales were up 24%, led by pickup and delivery, the Bentonville, Arkansas-based retailer said. E-commerce, however, remains unprofitable, hampering comparable-store sales by 300 basis points.
Walmart’s value-focused messaging has resonated with consumers during a time of high inflation and soaring interest rates. The retailer said its third-quarter sales were led by grocery and health and wellness, while general merchandise “declined modestly.”
“We had strong revenue growth across segments for the quarter and we’re excited to get an early start to the holiday season,” Walmart President and CEO Doug McMillon said in a statement. “From a Thanksgiving meal that costs less than last year, to great prices on fashion, toys, electronics and seasonal decorations, we’re here to help families from around the world make this a special time.”
But the retailer, in an interview with CNBC timed to its earnings release, noted that consumers are especially cautious and looking for deals, especially as the holiday shopping season nears.
“Our (sales) events have been strong,” Walmart CFO John David Rainey told the network. “We’ve been pleased with those. Halloween was good overall. But in the last couple of weeks of October, there were certainly some trends in the business that made us pause and kind of rethink the health of the consumer.”
For the third quarter, Walmart’s consolidated gross margin rate rose 32 basis points, positively impacted by a “slight improvement” for Walmart’s U.S. business and the timing of a major promotion at Flipkart, Walmart’s e-commerce business in India.
The retailer’s U.S. advertising business, Walmart Connect, reported 26% growth, while its Member Access Platform ads business at Sam’s Club grew 27%.
Membership-based warehouse retailer Sam’s Club reported net sales of $22 billion, up 2.8% from a year ago.
Sam’s Club comparable-store sales grew 3.8%, driven by a 4% increase in traffic and a 0.2% decrease in average ticket.
Sam’s Club gained both dollar and unit market share in grocery and in general merchandise categories, Walmart reported, with strong sales in food.
E-commerce sales at Sam’s Club increased 16% and membership income rose 7.2%, with record total membership.
Sam’s Club reported a record number of advertisers on its platform, with business in the segment up 27%.
The strong performance prompted Walmart to raise its financial guidance for fiscal year 2024, with net sales expected to grow 5% to 5.5%.
Walmart operates about 10,500 stores and many e-commerce sites in 19 countries.
The mass merchant’s earnings Thursday continued to contrast those of rival Target, which reported its second-quarter results the day before. Target’s food and beverage sales have weakened over the last year and its comparable-store sales fell 4.9% during the recent quarter.