Walmart's digital sales rose 24% in the U.S. during the third quarter.
As the nation’s top retailer – ranked No. 1 by Progressive Grocer – Walmart is a bellwether for consumer behaviors and shopping trends. Rounding the corner into 2024, Walmart is keeping its eye on cautious shoppers while celebrating a solid third quarter.
In its third-quarter financial report, Walmart reported a 4.9% bump in U.S. sales comps on a year-over-year (YoY) basis. Sales were driven by strong performances in grocery and health and wellness.
The retail behemoth posted a 5.2% revenue gain, with revenue surpassing $160.8 billion during the quarter. Adjusted operating income rose 3% in that time frame.
The retailer’s digital business is steaming along, too, as online shopping habits become more entrenched. E-commerce rose 15% on a global basis and flourished in the United States, with a 24% spike attributed to strength in pickup and delivery.
The revenue numbers beat analyst expectations, and Walmart upped its net sales guidance for fiscal 2025 to fall between 5% and 5.5%. The retail giant also raised its outlook for earnings per share, with a new range of $6.40 to $6.48.
“Looking ahead, our inventory is in good shape, the teams are focused, and our associates are ready to serve our customers and members whenever and however they want to be served,” summed up President and CEO Doug McMillon.
In an earnings call, company leaders reported that food and beverage prices remain elevated, but are lower than last year. As the cost of fresh foods goes down, they added, it frees up shoppers to spend more in general merchandise.
Although the financial results trended in a positive direction in the third quarter, there was a bit of a softening in late October, causing Walmart to sound a more cautious note as the holidays approach and the calendar turns over. “We’ve seen credit tightening 12 months after the Fed began raising rates and you also have repayment of student loans affecting 27 million Americans. We saw some anomalous weather in the back half of October, too. That’s why we’re taking a more cautious approach as we go into the fourth quarter, because there are trends that have been different than what we saw in the first weeks of the third quarter,” said John David Rainey, Walmart’s EVP and CFO.
External data also indicates some softening. Location intelligence firm Placer.ai reported that foot traffic at Walmart stores was down three percent from the third quarter of 2022 to the third quarter of 2023. Also exemplfying consumer's more thoughtful behavior, Placer.ai's data shows that although visits are down, median visit duration is generally up.
Even if there are continued pullbacks, Rainey noted, Walmart is well positioned to provide solutions and relief. “This is when we shine – when we can deliver value for our customers and members in any economic environment,” he declared.
As it focuses on value – including offering lower Thanksgiving prices than last year – Walmart is also zeroing in on store improvements. Following a fresh round of 197 store remodels completed in the third quarter, the retailer is continuing its remodel program into 2024. “We’re excited about the result we are seeing – we have a good plan there,” said John Furner, president and CEO of Walmart U.S.
Meanwhile, Walmart’s labor situation is improved from 2021 and 2022. Furner reported that stores and distribution centers are well staffed for the holidays, with a mix of full-time and part-time employees.
Walmart’s quarterly report also recapped Sam’s Club’s performance. During the 13-week period, net sales without fuel rose 3.2% at Sam’s Club and edged up 2.8% with fuel. Like Walmart, Sam’s Club also had a good quarter for e-commerce sales, which climbed 16%.
Each week, approximately 230 million customers and members visit Walmart’s more than 10,500 stores and numerous e-commerce websites under 46 banners in 24 countries. The Bentonville, Ark.-based company employs approximately 2.3 million associates worldwide. Walmart U.S. is No. 1 on Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. PG also named Walmart one of its Retailers of the Century.