Walmart Inc. posted higher quarterly sales, continuing a string of solid growth as the world’s largest retailer taps into online shopping and a robust U.S. economy ahead of the busy holiday selling season.
Sales at U.S. stores open a year rose 3.4% in the quarter ended Oct. 26, including a 43% jump in e-commerce revenue. Walmart executives said same-store sales, which exclude volatile gasoline sales, will grow at least 3% for the full fiscal year.
Walmart’s results followed a strong earnings report from Macy’s Inc. on Wednesday, signs that retailers are heading for a healthy holiday shopping season. American consumers picked up their spending in October after two consecutive months of declining retail sales, the Commerce Department reported Thursday.
But not everyone is benefiting from the rebound in consumer spending. Sears Holdings Corp. filed for bankruptcy protection last month, capping years of shrinking sales and hundreds of store closures.
J.C. Penney Co. on Thursday reported lower sales and a wider net loss in its latest quarter. It also lowered its full-year sales guidance. Penney’s chief executive, Jill Soltau, who joined the company last month, said the department store needs to do a better job clearing excess inventory and understanding what its customers want.
At Walmart, total quarterly revenue was $124.9 billion, an increase of 1.4% as lower international sales and currency translations slowed the overall gains. Walmart shed control of its operations in Brazil and is merging its U.K. operations with a rival to focus on its domestic business and e-commerce operations.
Profit attributable to Walmart was down 2.2% from a year ago to $1.71 billion, or 58 cents a share.Walmart’s stock was flat in early Thursday trading, after closing at $101.53 on Wednesday. The shares are trading near all time high of $109.98 but are little changed from where they started the year.
In the U.S., Walmart said sales growth was driven by market share gains in groceries, household goods and other categories. Executives highlighted demand for fresh food and apparel, including Walmart’s house brands, as well as toys as the company expanded its selection after the collapse of Toys R Us Inc. It’ is selling 40% more toys online this fall versus last year.
In the most recent quarter, Walmart’s gross margins fell slightly as the company lowered prices, absorbed higher transportation costs and e-commerce made up a larger percentage of sales, said Walmart’s finance chief Brett Biggs.
Walmart aims to get closer to profitability in its online segment by selling more items that are infrequent, but higher-margin purchases, in addition to common household goods, said Mr. McMillon. “The process takes time, and we’re making progress,” he said.
While most of its U.S. sales come from groceries, Walmart has added trendy fashion to its online assortment. In the past year, it has struck a deal to sell apparel from Lord & Taylor through Walmart.com and acquired online lingerie seller Bare Necessities and plus-size clothing brand Eloquii.
Walmart previously acquired men’s fashion site Bonobos and women’s clothing seller ModCloth.
Walmart is reviewing every item expected to be subject to tariff-related increases in the coming months, discussing with suppliers ways to reduce costs, said executives. “The teams are hard at it,” and merchandising executives are traveling overseas to study the issue, said Walmart U.S. CEO Greg Foran on a call with reporters.
Thus far retailers that have made strategic shifts to shrink store footprints and grow sales online appear in position to benefit from a robust holiday shopping season, riding a wave of solid economic growth. Wages grew in October at the fastest rate in nearly a decade and the unemployment rate remained at a 49-year low.