Walmart has told its workers that it plans to “win” the holiday season. Ahead of the peak shopping period, the nation’s largest retailer appears well positioned, citing “broad-based strength” across its product range.
Walmart said Tuesday that U.S. sales increased 5 percent in the third quarter, to $114.9 billion, easily surpassing analysts’ estimates. Its U.S. e-commerce business jumped 22 percent, aided by pickup and delivery options and its expanding online advertising and marketplace business.
Operating profit for the quarter rose 9.1 percent at the retailer’s U.S. unit. Walmart raised its full-year forecast for sales and profit, higher than the estimates it had already increased last quarter.
Doug McMillon, Walmart’s chief executive, said the company had “momentum.”
“In the U.S., in-store volumes grew, pickup from store grew faster, and delivery from store grew even faster than that,” he said in a statement Tuesday.
Walmart, which brings in millions of customers each week, is a bellwether of U.S. consumer trends. The period between Thanksgiving and New Year can make or break a retailer’s year, and companies are unsure about how freely shoppers will spend in the weeks ahead.
Stung by inflation, consumers have shown that they are looking for low prices and convenience, such as free or fast shipping. The squeeze has been acute on lower-income shoppers, a core customer base for Walmart, and more higher-income customers have been trading down to Walmart in recent years. Walmart said those more affluent shoppers continued to buoy sales in its latest quarter.
Walmart has focused on low prices, such as a range of toys under $25 and cutting the cost of products for Thanksgiving dinner by 3 percent from last year. It has also invested in technology to make online shopping more convenient and delivery times faster. Last week, the retailer started running its Black Friday deals both online and in stores.
Consumer spending has held up as inflation has cooled, wages have grown and the job market has remained resilient. Retail sales in October ticked up 0.4 percent, the Commerce Department reported last week, a slightly better result than economists expected. That period covered Halloween spending, which many retailers, including Walmart, have pointed to as an increasingly important shopping period. Consumer companies have said Americans seem motivated to shop around seasonal events, such as Halloween and Christmas, even as they rein in spending at other times.
Retailers have indicated that they are planning cautiously for the last few weeks of the year, aiming not to be stuck with products that can only be unloaded via discounts. At Walmart, inventory declined slightly in the third quarter, by 0.6 percent, while maintaining “healthy in-stock levels.”
At Walmart, the number of visits during the quarter were up 3.1 percent, while the average amount spent per visit showed an increase of 2.1 percent.
Wall Street will get more information about the state of U.S. consumers when Target and T.J. Maxx’s parent company report earnings later this week.
Last week, Home Depot reported a rise in sales and upgraded its full-year forecast as it saw signs that people were ready to pick up remodeling projects. But the home-improvement retailer said the number of visits and the amount that customers spent with them dipped slightly from the previous year.
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