(New York) The American hypermarket chain Walmart has slightly raised its forecasts for the whole year in an uncertain macroeconomic context, after a third quarter in line with expectations marked in particular by a jump in e-commerce in the United States.
Boss Doug McMillon stressed in a press release published Thursday that the chain had seen a “strong” increase in sales in all segments, saying he was “excited” about the approach of the end-of-year holidays which begin on the 23 November with the very traditional Thanksgiving gathering of American families.
“Price levels in the United States for many food products continue to be concerning. The cost of our products remains higher than last year and even over two years. This puts our customers under pressure,” he noted during a conference with analysts.
“We see that our customers are still careful in their trade-offs between what they can afford to buy and what they need,” he explained.
Inflation slowed in the United States in October, after several months of summer rebound, to stand at 3.2% year-on-year. But food prices remained on the rise, as did housing, car insurance and even health care.
“Fears that Walmart traffic would decline as inflation recedes have not materialized as Americans remain under financial pressure and seek to stretch their dollars as far as possible. Many went to Walmart,” Neil Saunders, director at GlobalData, commented in a note.
Walmart’s revenue rose 5.2% in the third quarter of its delayed 2024 fiscal year to $160.80 billion and its net profit reached $453 million, after a loss of $1.80 billion a year ago earlier due to a legal settlement related to the opioid crisis.
Reported per share and excluding exceptional items – a benchmark for the markets – the net profit came to $1.53. The FactSet consensus was calling for $1.52.
Walmart once again raised its like-for-like guidance for this fiscal year.
In particular, it expects annual revenue growth of around 5% to 5.5% (4% to 4.5% previously) and net earnings per share of $6.40 to $6.48 ($6.36 previously $6.46). The latter stands at $4.85 for the past nine months.
Despite these announcements, Walmart shares fell 6.82% Thursday around 10:30 a.m. (Eastern time) on the New York Stock Exchange, after reaching an all-time high the day before. The markets showing themselves disappointed with the forecasts.
But Chief Financial Officer John Rainey told analysts that this “slightly more cautious approach than three months ago” was due to “uneven sales” since mid-October.
“We are comforted by an increase in footfall and by market share gains, which should continue,” he added, expecting a “normalization of inflation in grocery compared to historical levels”.
In the United States, Walmart sales grew 4.4% to 109.4 billion with e-commerce jumping 24% driven by drive-thru (operated in around 4,600 stores) and deliveries (around 4,200 stores) which had already swelled well in the second trimester.
Its business was driven by grocery and health and wellness departments while general products “declined modestly.”
Internationally, sales growth reached 2.7% to 28 billion, thanks to a good performance in Mexico and China. E-commerce (-3%) suffered from underperformance in India, but held up well elsewhere, spreading significantly in some countries.
But the passage of Hurricane Otis in the Acapulco region at the end of October affected twenty-eight supermarkets, only half of which have reopened at this stage, Mr. Rainey said.
The group benefited from a positive currency effect of $1.4 billion.
Its semi-wholesale brand Sam’s Club saw its sales increase by 2.8% to 22 billion, driven by food products, consumer goods and health products.
Walmart has approximately 10,500 stores in nineteen countries and employs approximately 2.1 million people.
