Home Industry Retail Walmart Boosts Outlook as Shop...

Walmart Boosts Outlook as Shoppers Spend More on Discretionary Items

Retail

Business Honor
27 November, 2024

Retail giant raises sales forecast, citing growth in e-commerce and strong holiday shopping momentum.

Walmart raised its full-year sales forecast after reporting stronger-than-expected third-quarter earnings, fueled by growth in both its e-commerce business and sales of discretionary merchandise. The retailer now expects net sales to grow between 4.8% and 5.1%, up from its previous forecast of 3.75% to 4.75%. The improved outlook follows a solid performance in the third quarter, where Walmart posted earnings per share of $0.58, surpassing analysts' expectations of $0.53.

In a CNBC interview, Chief Financial Officer John David Rainey highlighted that Walmart's general merchandise sales—those outside the grocery department—rose year-over-year for the second consecutive quarter. This marks a turnaround after 11 straight quarters of declines in that category. Rainey noted that while consumers remain cautious, particularly when it comes to non-essential items, they are more willing to spend on products they see as offering good value, especially during the holiday season.".

Walmart's total revenue was $169.59 billion during the quarter, higher from last year's comparable quarter revenue of $160.8 billion. Comparables sales, one of the most closely followed retail statistics, rose 5.3 percent. Sam's Club, Walmart's membership-based warehouse chain, reported a 7 percent increase in the same-store sales excluding fuel.

The retailer also enjoyed strong growth in its e-commerce business, with U.S. online sales up 22%, on surging growth of curbside pickup and home delivery. Walmart's push into third-party marketplace sales and advertising has helped to further build out its digital offerings, which brought it closer to breaking even on the e-commerce business.

Despite the positive trends, Rainey warned that tariffs on Chinese imports imposed in the Trump administration may keep pressure on prices. Still, Walmart's "everyday low price" model remains its steadfast commitment, but the company would be forced to increase prices on a number of its goods if that comes to fruition. Rainey pointed out two thirds of Walmart's products are made in the U.S., which limits exposure risks to tariffs.

The retailer’s upbeat holiday forecast aligns with a modestly optimistic outlook for consumer spending. The National Retail Federation expects holiday sales to increase by 2.5% to 3.5% compared to last year, although growth may be slower than in 2023. Walmart’s stock has surged nearly 60% this year, reflecting strong investor confidence in the retailer’s ability to navigate a challenging retail environment.