Walmart's revenue rises 4.3% in quarter

Income falls shy of expectations

This undated file photo shows Walmart's sign in front of its Bentonville headquarters.
This undated file photo shows Walmart's sign in front of its Bentonville headquarters.

Walmart Inc.'s nearly 10% growth in sales at stores open for at least a year helped drive third-quarter revenue, the company said Tuesday.

Reporting before the markets opened, the Bentonville-based retailer said revenue grew 4.3% over last year's third quarter, from $134.7 billion to $140.5 billion.

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Company executives said in a conference call with investors that the same-store sales growth reflected a return of in-store shoppers and increased spending driven by government stimulus funds and inflation.

Same-store sales are considered a key indicator of a retailer's health.

Walmart posted net income of $3.12 billion, or $1.11 per share, for the quarter that ended Oct. 31. That's down 39.5% from $5.14 billion, or $1.80 a share, in the same quarter last year.

Per-share earnings missed the average estimate of $1.40 from 26 analysts surveyed by Thomson Reuters.

Walmart's shares closed Tuesday at $143.17, down $3.74, or 2.55%, on the New York Stock Exchange. The stock has traded between $126.28 and $153.66 in the past year.

While the year has had its challenges, the company saw gains in all segments, excluding divestitures, said Doug McMillon, Walmart's president and chief executive officer. It also continues to gain market share in grocery, he said.

Walmart has worked since February in preparing to manage the global supply chain disruptions, he said.

With Walmart's inventory up 11% in the third quarter, McMillon said, the company is ready for Christmas shoppers. It has also hired 200,000 workers to staff fulfillment centers and other parts of its supply chain, he said.

"We have the people, the products, and the prices to deliver a great holiday season for our customers and members," McMillon said.

Although inflation continues pushing prices up, Walmart's size and scale make the company better able than smaller retailers to keep prices low, said Brian Yarbrough, a retail analyst with financial services firm Edward Jones.

"They have a better ability to push back on some of the prices that these suppliers are trying to push through," Yarbrough said. "Then that allows them to keep their prices a little bit lower, which helps drive traffic to their stores."

Since Walmart is the biggest client for many suppliers, Yarbrough said, "it's always a difficult conversation when you're trying to raise prices with Walmart. It's a constant negotiation."

Yarbrough said investors feel very confident about how the company is being managed. But they are also looking at how much of Walmart's income is attributable to government stimulus and inflation, and how that will play out in 2022, he said.

In October, the last month of Walmart's third quarter, U.S. retail sales across the board rose 16.3% over October 2020, said Ken Perkins, president of research firm Retail Metrics LLC.

Perkins said factors such as inflation, early Christmas shopping and strong consumer demand contributed to the sales increase. And rising fuel prices greatly benefited gasoline retailers, he said.

Walmart's U.S. unit, by far the company's largest, posted net sales of $96.6 billion for a 9.3% gain. Same-store sales, excluding fuel, rose 9.2%, and U.S. e-commerce net sales rose 8%.

The division's inventory grew 11.5% as the company stocked up for what it expects will be a strong Christmas shopping season.

Walmart U.S. now offers curbside pickup at about 4,300 stores and pickup locations, and same-day delivery at about 3,300 stores. The retailer remodeled 174 stores in the quarter.

Walmart International saw net sales drop 20%, to $23.6 billion. The company said divestitures accounted for $9.4 billion of that reduction. However, the unit retained market growth of 17%.

Inventory in the international division rose 10.4% in the quarter. Despite a $1.7 billion drop because of divestitures, the increase came from low levels of inventory in 2020 and early preparations for this year's festive seasons.

Walmart China led international markets in net sales, posting growth of 18.8%. Its same-store sales rose 16.5%. And e-commerce net sales in the country surged 96%.

Walmart's operations in Mexico and Central America, often referred to as Walmex, gained 8.7% in net sales and 7.2% in same-store sales. Walmex is Walmart's largest international market.

At Sam's Club, Walmart's warehouse club division, net sales including fuel gained 19.7% to reach $19 billion. Same-store sales, excluding fuel, jumped 19.8%.

Sam's Club's e-commerce net sales climbed 32% on strong demand for curbside pickup and home delivery services.

Club membership income rose 11.3%. The division saw a record total member count, though it doesn't disclose membership numbers. Renewal rates also remained strong.

In its earnings presentation,Walmart gave updated guidance for the fourth quarter and fiscal year, which ends Jan. 31.

For the fourth quarter, the retailer expects Walmart U.S. to see same-store sales rise around 5%, excluding fuel.

For fiscal 2022, same-store sales at Walmart's U.S. stores are expected to rise 6%, excluding fuel. The company expects non-adjusted earnings per share of around $5 and capital expenditures of about $13 billion.

The new guidance "assumes continued strength in the U.S. economy and no significant additional government stimulus," the company said.

A replay and transcript of Tuesday's presentation and conference call with investors are available at Walmart's corporate website,

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