Great results: Walmart raises outlook for the year again
Walmart, the largest U.S. retail chain, raised its full-year forecasts for sales and profit, reflecting strong customer interest in groceries and other goods in stores and online. The move comes after a third consecutive outlook increase, suggesting the company is gaining market share ahead of the upcoming holidays.
Strong growth in tough times
In the third quarter ended Oct. 31, Walmart $WMT reported sales growth of 5.3% at its U.S. unit, beating analysts' expectations. The growth was fueled not only by continued interest in groceries, but also by booming demand for non-strategic products that have long been marred by high inflation. People are shopping more online, with e-commerce sales up 27%, reflecting the growing trend of shopping from the comfort of home. Walmart also reported strong interest in its health and wellness products, including weight-loss drugs.
The company's total sales were $169.59 billion, higher than the expected $167.72 billion. The company's net income increased to $4.58 billion (57 cents per share), up significantly from $453 million (6 cents per share) in the same period of the previous year.
The sales growth is not only the work of lower inflation, but also an improvement in overall consumer purchasing power. The company has focused on ensuring lower prices and better availability of goods, particularly in its own brands and food. This approach is proving successful, as Walmart is benefiting from the demand for staple foods and holiday gifts at the lowest possible prices.
Adapting to new trends
In response to the growing interest in online shopping, Walmart has invested billions in automating its logistics network, speeding up deliveries and improving food freshness. The company also discounted its Walmart Plus membership by 50%, making its delivery system more attractive and now offering unlimited same-day delivery on orders over $35.
According to CEO Doug McMillon, there is increasing demand in the US not only for groceries but also for other products, with services such as in-store pickup and home delivery growing in popularity. Although inflation is not yet fully under control, its slowing trend and higher disposable incomes are boosting consumer confidence and improving sales.
Outlook for the festive season
Walmart currently expects total sales for fiscal year 2025 to grow by 4.8% to 5.1%, a significant increase from its previous outlook of 3.75% to 4.75%. With this positive outlook, the company's stock value is also rising, having increased by nearly 60% during this year. These numbers point to Walmart's strong position ahead of holiday shopping, which will be key for the end of this year.
However, even though the company is reporting strong results, it faces challenges such as uncertainty over tariffs and potential price increases on some products. However, Walmart says that most of its goods are sourced in the U.S., which reduces the impact of tariffs on prices. Even so, it will have to factor in that some items may be more expensive due to inflation or external economic pressures.
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Source: CNBC, Yahoo Finance.