Walmart reported strong revenue growth of 5.2%, with comparable sales experiencing an increase of 4.9% for Walmart and 3.8% at Sam’s Club, for Q3 24. However, the giant retailer still provided a cautious outlook on consumer spending, causing company shares to decrease by 8% on Thursday.
The company adjusted its earnings per share from $6.40 to $6.48, lower than expected but higher than the previous range, and predicted FY24 net sales will increase from 5% to 5.5%.
The retailer underwent a higher degree of variability in U.S. weekly performance between holiday events, including experiencing softer sales at the end of October, which was off-trend compared to the rest of the quarter. This unevenness has the retailer approaching the upcoming holiday season with more trepidation in terms of consumers than merely 90 days ago.
John David Rainey, Walmart’s chief financial officer, commented that the retailer had seen a drop in sales before and after significant promotions, signaling consumers are shopping for deals more than ever.
“We see our customers showing ongoing discretion in making trade-offs to be able to afford the things they want, given the sustained high cost of the things they need,” Rainey said on a recent earnings call.
However, the retailer highlighted that deflation has started to take effect, with prices falling for dairy, eggs, chicken, and seafood. This will benefit Walmart shoppers but not their sales, which benefited from higher prices during inflation.
General merchandise prices are also declining, allowing the retailer to offer increased consumer benefits.
“That enables us to roll back pricing, which will help our customers during this holiday season when general merchandise is so important for gift giving,” said CEO Doug McMillon.
Walmart recently announced major store reopenings and increased fulfillment capabilities ahead of the holiday shopping season. Improvements to their supply chain will also allow them to increase consumer conveniences, like same-day delivery options and late-night delivery services.
"During the quarter, we opened our third next-generation e-commerce fulfillment center," said Rainey. "These 1.5-million-square-foot facilities are expected to more than double the storage capacity, enable two times the number of customer orders fulfilled daily, and will expand next and two-day shipping to nearly 90% of the U.S., including marketplace items shipped by Walmart fulfillment services.
"They also unlock new opportunities for our associates to transition into higher-skilled, tech-focused positions. To support the store-fulfilled digital business, we're on track to have seven stores with automated market fulfillment centers, or MFCs, operational by the end of this month. These MFCs stock thousands of the most sought-after items and are expected to increase order capacity and productivity while also increasing inventory accuracy, which helps us deliver perfect orders for customers. As we focused on improving e-commerce margins, we're making good progress in lowering digital fulfillment costs and densifying the last mile by tapping our broad store and club network."