GuruFocus -
- Revenue Growth: Sales grew 6.1% in constant currency.
- Profit Growth: Profit increased by 9.8%.
- E-commerce Growth: E-commerce sales increased by 27% globally.
- Advertising Revenue: Advertising grew by 28%.
- Membership Income: Membership income rose by 22%.
- Walmart (NYSE:WMT) International Sales: Sales grew 12.4% in constant currency.
- Walmart US Comp (WA:CMP) Sales: Comp sales increased by 5.3%.
- Sam's Club US Comp Sales: Comp sales rose by 7%.
- Gross Margin: Consolidated gross margin expanded by 21 basis points.
- Operating Income: Operating income grew 9.8% in constant currency.
- Adjusted EPS: Increased nearly 14% to $0.58 per share.
- Store Fulfilled Delivery: Increased nearly 50%, surpassing a $2.5 billion monthly run rate.
- Inventory Management: Inventory declined by 0.6% on more than 5% sales growth.
- Marketplace Growth: Marketplace grew 42% in Q3.
- Guidance Update: Full-year sales growth expected to be 4.8% to 5.1%; operating income growth of 8.5% to 9.25%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Walmart Inc (NYSE:WMT) reported a strong quarter with sales growth of 6.1% in constant currency and a profit increase of 9.8%.
- E-commerce sales grew by 27%, and advertising revenue increased by 28%, showcasing robust growth in digital channels.
- Membership income rose by 22%, indicating strong engagement and value perception among customers.
- Walmart International saw a significant sales increase of 12.4% in constant currency, driven by strong performance in markets like Mexico, India, and China.
- The company is effectively leveraging technology, such as Generative AI, to enhance customer experience and operational efficiency.
- Walmart Inc (NYSE:WMT) faced margin pressure due to the growth in GLP-1 drugs, impacting gross profit mix.
- The company experienced unanticipated expenses due to hurricanes in the Southeastern United States, affecting operating income growth.
- Despite positive general merchandise sales, the segment continues to face deflationary pressures.
- Currency fluctuations negatively impacted reported sales and operating income growth by 70 and 160 basis points, respectively.
- The timing of Flipkart's Big Billion Day event created a headwind for Q4 sales comparisons.
A: Doug McMillon, CEO, emphasized the importance of general merchandise, noting its potential for growth across stores, clubs, and e-commerce. John Furner, CEO of Walmart U.S., highlighted improvements in general merchandise despite ongoing deflation, with positive comps driven by unit growth in categories like home and toys. Chris Nicholas, CEO of Sam's Club, and Kathryn McLay, CEO of Walmart International, echoed similar sentiments, emphasizing the role of convenience and digital engagement in driving growth.
Q: How is Walmart balancing investments in price and wages with profit growth?
A: Doug McMillon, CEO, stated that Walmart is investing appropriately in prices and wages while maintaining the ability to grow profits faster than sales. CFO John Rainey added that the company is striking a balance between profit expansion and business investment, aiming for operating income to grow faster than sales over the next several years.
Q: What factors contributed to the acceleration in top-line growth in Q3?
A: Doug McMillon, CEO, noted that the underlying momentum remained consistent, with some acceleration due to storms and the timing of the Big Billion Day's event. CFO John Rainey mentioned that the event added about 60 basis points to growth in Q3, which will reverse in Q4, but overall business performance remains strong.
Q: Can you elaborate on the growth and profitability of Walmart's e-commerce business?
A: Doug McMillon, CEO, expressed confidence in the long-term profitability of e-commerce, emphasizing the importance of balancing first-party and third-party sales, delivery speed, and customer satisfaction. He noted that while profitability is not the immediate focus, the overall business model is set to grow profits faster than sales.
Q: How is Walmart gaining market share among upper-income consumers?
A: Doug McMillon, CEO, explained that Walmart's appeal to upper-income consumers is driven by a combination of price and convenience, with strong performance in both grocery and general merchandise. John Furner, CEO of Walmart U.S., added that the omni-channel approach, including pickup and delivery, is attracting higher-income customers, particularly in categories like gluten-free and organic products.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.