Walmart Beats Market Estimates For Holiday Quarter Sales

The strength of the US economy was evident in the results of Walmart Inc which reported quarterly performance numbers for the holiday quarter which beat estimates, driven by increased consumer spending which led to more e-commerce purchases. The shares of the company rose by almost 3 per cent following the publication of the results.

A strong labor market and cheaper gasoline prices aided increase in consumer spending and the results offered a glimpse into the current situation of the U.S. economy and consumer spending.

“We still feel pretty good about the consumer. We haven’t seen much of a change,” Walmart Chief Financial Officer Brett Biggs told the media. “The data we are seeing still looks pretty healthy. Gas prices are down year over year, which helps.”

The US government reported last week that in December, there was a very sharp drop in U.S. retail sales which was the highest in over nine years as revenues dropped across the industry which indicated a significant slowdown in economic activity in the country at the end of 2018.

But according to a Mastercard report in late December, the 2018 U.S. holiday shopping season recorded a sale growth which was highest in the last six years as early discounts encouraged shoppers to spend more.

In the fourth quarter ended January 31, there was a growth of 4.2 per cent in sale in Walmart stores in the US which have been open for at least one year, excluding fuel. And according to IBES data from Refinitiv, the markets were expecting the growth to be around 2.96 per cent.

Walmart said that the partial government shutdown resulted n the government distributing food stamp aid early by the federal government which also boosted sale.

According to IBES data from Refinitiv, Walmart reported adjusted earnings per share at $1.41 per share which was more than the analysts’ expectations of $1.33 per share.

During the quarter, there was an increase of 43 per cent increase in online sales which was similar to the growth in the segment in the previous quarter. Growth in the segment was driven by expansion of Walmart’s online grocery pickup and delivery services and a bigger products portfolio for its online business.

The program of the company in which the consumers are able to order online and later pick up the products at its U.S. stores was expanded by the company. By next January, this service would be available at 3,100 stores, the company said. 2100 stores offered the services at the end of the third quarter.

By the end of the current year, 800 more Walmart stores would add grocery deliveries which would bring the total number of stores offering the service to 1,600 stores during the same period.

56 per cent of the total revenues of the company currently is accounted by grocery sales. The huge network of Walmart allows the company to offer fresh food within 10 miles of 90 percent of the U.S. population which is an advantage for the company, Walmart Chief Executive Officer Doug McMillon claimed at its investor day last year.

(Adapted from Reuters.com)

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