Walmart (NYSE:WMT) reported robust third-quarter earnings on Thursday, with a revenue of $160.8 billion, reflecting a 5.2% increase compared to the previous year and surpassing expectations. US same-store sales grew by 4.7%, exceeding the expected 3.35%, while adjusted earnings per share stood at $1.53, slightly above estimates of $1.52. However, Walmart’s shares dropped nearly 8% in early trading following the report.
Walmart CEO Doug McMillon highlighted strong and consistent foot traffic and transaction counts throughout the quarter. Yet, the company expressed caution about the future due to an uncertain macroeconomic environment. Walmart attributed a potential shift in spending to factors such as a “pressured consumer” and unusual weather in late October.
Despite the positive third-quarter results, Walmart provided cautious guidance for the remainder of the year. The company raised its full-year earnings per share outlook to $6.40-$6.48, surpassing its previous guidance but falling below the expected $6.48.
CFO John Rainey mentioned higher variability in weekly performance and a softening in the back half of October as reasons for caution. Walmart anticipates sales growth moderation in the fourth quarter as inflation in grocery prices slows down. However, the company remains encouraged by increased traffic and share gains.
Key drivers of Walmart’s sales growth include e-commerce, grocery, and pharmacy sales. US e-commerce sales surged by 24%, driven by an increase in pickup and delivery orders. The grocery department experienced mid-single-digit growth, with consumers seeking value amid economic challenges. The health and wellness unit saw sales jump in the high teens due to factors such as increased prescription counts and immunizations.
General merchandise sales had a low-single-digit drop, attributed to fewer purchases of discretionary items like apparel, home decor, and toys. Walmart’s inventory in the US declined by 5%, addressing concerns raised last year when retailers had excess stock.
While Walmart faces caution regarding the state of consumers, the company plans to continue its store improvement initiative in the US, which involves remodeling stores and implementing wage changes. Walmart’s cautious outlook, despite strong sales, mirrors concerns about the unpredictable economic landscape and consumer behavior.
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Author Faith Yakubu 
