- Walmart results for the third quarter showed that the group was gaining market share, despite a challenging consumer operating environment. It also believes that it can gain additional market share in the grocery segment due to its strong value offerings.
- Revenue for the third quarter increased 8.8% year-over-year to $152.8 bn beating estimates by $6 bn.
Walmart’s omni-channel business model continues to gain momentum with ecommerce sales growth of 16% year-on-year and 24% on a two-year basis. - Sam’s Club, the prime top end of the Walmart market grew sales by 12.8% with membership income increasing by 8%, resulting from membership numbers reaching a record high.
- The Walmart App, is part of the company’s digital focus, and can schedule pick up times, build shopping carts online, as well as skip the line with scan and go, thereby bypassing queues at the tills.
- The groups’ international net sales of $25.3bn were up by 7.1%, with emerging markets such as Mexico reflecting robust growth.
- Inventory levels appear to still be elevated, having increased by 13%, but seem to be on the right track, after they declined 26% compared to that of the second quarter, due to discounts and other initiatives taken by management.
- Walmart incurred a loss of $1.8bn, or $0.66 per share due to a fine of $3.33bn as part of opioid legal bills. Allegations which the company strongly disputes.
- The adjusted EPS of $1.50, to exclude the once-off opiate charges, beat the market estimates of $1.32, which was a pleasant surprise thanks to the group’s pharmacy division.
- The fourth quarter outlook reflects an improvement from a decline in revenue of 9% – 11% to a decline of only 6.5% – 7.5%. The share price of $148 per share puts the company on a forward PE of 22x, which looks fully priced in the short term, but is an investment for patient long term investors.
By Ron Klipin