Walmart has reported solid top-line growth for the third quarter, as the nation’s largest retailer continued to gain market share and positioned itself for a strong finish to the year.
The company’s revenue increased 5.8 per cent to $179.5 billion (6 per cent in constant currency) during the quarter ended October 31. This includes a 5.1 per cent lift at Walmart US and a 3.1 per cent growth at Sam’s Club.
GlobalData MD Neil Saunders said the retailer delivered an “extremely upbeat” set of results, which underline that it continues to advance both its sales line and share of the market.
“Of course, the tune that plays for Walmart may not be the one that plays for all retailers, which is testament to Walmart’s focus and discipline,” he said.
The analyst pointed out three engines that have been driving the strong performance, namely the core grocery and essentials business, the expanded retail footprint, and the ancillary businesses – including retail media.
“The core business is the heart of Walmart, and it is an area the company continues to invest in, even as it focuses on new things. Walmart’s operational prowess here should not be underestimated, and its ability to consistently deliver on retail basics like in-stocks, sharp pricing, and efficient service are key to customer satisfaction and retention,” he said.
While the gains of customers are not quite as sharp as they were a couple of years back, the numbers are still rising as more people turn to Walmart for great value and to save money, he continued. Many of the new recruits are also active online, which underlines the importance of the investment Walmart has made into its ecommerce proposition in grocery.
The company has also been expanding its retail footprint via its marketplace.
According to Saunders, the expansion of the offer and more collaboration with selling partners is one of the reasons why Walmart’s e-commerce growth is so strong.
“Although Amazon remains the go-to marketplace in the US, Walmart is gaining ground and is building up a loyal base of customers,” he said.
Saunders expects the marketplace to be a continued success story going forward. However, he said that the real battleground will come from online grocery where Amazon has ambitions to integrate fresh and perishable foods into its core offer.
Regarding the ventures around retail media, the analyst described Walmart as one of the few players that can pull in advertising dollars in a significant way, thanks to its scale and reach. He believes this will continue to be helpful to revenue and to margins.
For the full year, the company has upgraded its outlook and expects net sales to grow 4.8-5.1 per cent, compared to the previous range of 3.75-4.75 per cent.
“As Doug McMillon prepares to depart, he leaves Walmart in a very good position,” Saunders said.
“The business now falls to John Furner to keep the ship steady at the same time as future-proofing it for new opportunities like AI. This is not an easy task, but Walmart has the skills and the financial firepower to continue its upward trajectory,” he added.
