business news in context, analysis with attitude

Walmart yesterday released its Q3 numbers, saying that it had total revenue of $160.8 billion, up 5.2% from the same period a year ago, on US same store sales that were up 4.9 percent and digital sales that were up 24 percent.

The company said that Sam's Club same-store sales were up 3.8 percent, with membership income up 7.2 percent.

Walmart International net sales were $26.7 billion, up 5.4 percent.

The company's consolidated operating income was up $3.5 billion, or 130.1 percent.

CNBC notes that "in the U.S., shoppers both visited and spent more. Customer transactions rose 3.4% and the average ticket grew 1.5% compared with a year earlier … Walmart is also making money in newer ways, such as selling ads and annual memberships to Walmart+, its answer to Amazon Prime.  Revenue for its ad business, Walmart Connect, jumped 26% from the prior-year period."

In its analysis, the Wall Street Journal writes that "there are four corners of retail that are working well right now: Online, off-mall, convenience and value."  The evidence suggests that Walmart is "thriving" in all of them.

The Journal also writes that "consumers are still giving priority to necessities over discretionary purchases such as clothes and toys. At Walmart U.S., comparable sales for groceries rose by a mid-single-digit percentage, while the health-and-wellness category rose by a high-teens percentage - driven by strong pharmacy sales and immunization demand. Comparable sales for general merchandise declined by a single-digit percentage. As other retailers have called out, Walmart said shopping is becoming more concentrated around holiday events, with more noticeable lulls in between."

Analysis from CNBC:

"The company’s shares slid more than 7% in morning trading Thursday after they touched an all-time high the previous day. Walmart gave a slightly lower-than-expected forecast for the year as it enters the critical holiday shopping season.

The company anticipates adjusted earnings per share of $6.40 to $6.48 for the year, lower than the $6.48 analysts expect but higher than its previous range. Walmart expects consolidated net sales will rise 5% to 5.5%, also an increase from its prior range.

"Inflation has also waned — and for some categories, deflation has taken hold — a trend that could help Walmart’s shoppers but hurt the company’s sales. Prices of some grocery items remain higher, but they have fallen for dairy, eggs, chicken and seafood, CEO Doug McMillon said on the company’s earnings call. He added that relief is coming for customers as they look for holiday gifts."

KC's View:

To me, the really interesting numbers are those concerning customer count and transaction size - both are up, supporting the notion that in some ways, inflation and a recessionary mindset in some ways are Walmart's best friend.  They play right into the company's sweet spot and, as the Journal points out, that spot is both enlarging and getting sweeter.