Walmart kicks off holiday with a bang as shoppers return to stores

  • Walmart increases annual sales and profit forecast
  • Third-quarter sales at U.S. stores that have been open for at least a year increased 9.2%
  • Third quarter gross margin drops 42 basis points on supply chain costs

Nov. 16 (Reuters) – Walmart Inc (WMT.N) raised its annual sales and profit forecast on Tuesday in anticipation of increased demand for toys and clothing during the crucial holiday season, even as disruptions of the global supply chain hit its margins in the third quarter.

Major retailers, including Amazon.com (AMZN.O), are struggling to import products into the United States ahead of peak shopping season due to shipping bottlenecks, plant closures in parts of the United States. Asia and the shortage of raw materials in recent months.

However, Walmart has kept prices low to attract shoppers to its stores, and has limited disruption due to supply chain shortages by chartering its own ships to ship goods, ordering products from the United States well to there. advancing and redirecting deliveries to less congested ports.

It helped Walmart boost U.S. inventory by 11.5% ahead of the busy holiday season, with executives saying measures to tackle port delays have positioned Walmart well for the holidays.

“We have the people, the products and the prices to provide a great holiday season for our customers and members,” said General Manager Doug McMillon. Walmart said it hired more than 200,000 new store and supply chain workers to deal with the holiday rush.

With more than 5,000 stores in the United States, the size of the discounter and its influence over consumer products companies allows it to sell products at lower prices, a key advantage when US inflation is at its highest. for 30 years.

“The long period of sustained demand for goods has stretched supply chains, leading to stockouts and inflation,” McMillon said.

“Fighting inflation is in our DNA.”

MARGIN PRESSURE

Shoppers wear face masks while shopping at a Walmart store in Bradford, Pennsylvania, United States, July 20, 2020. REUTERS / Brendan McDermid / File Photo

Walmart’s forecast comes weeks after rival e-commerce giant Amazon reported a disappointing fourth-quarter outlook and warned of higher costs during the holiday season. Read more

The Bentonville, Arkansas-based company also said it expects comparable store sales in the United States for the full year to be 6% higher than its previous forecast of d ‘an increase of 5% to 6%. Adjusted earnings are expected to be around $ 6.40 per share, down from a previous range of $ 6.20 to $ 6.35.

In the third quarter, sales at U.S. stores open at least a year ago increased 9.2%, excluding fuel, benefiting from higher food demand and increased in-store purchases. Analysts had estimated a gain of 7.04%, according to data from Refinitiv.

“We have gained market share in the grocery store in the United States, and more customers and members are returning to our stores and clubs around the world,” said McMillon.

Walmart’s international business grew by around 10% excluding the impact of currency fluctuations and divestitures, benefiting from strong sales in China and at Flipkart in India, which was heavily boosted by its promotional event ahead of the local Diwali festival.

However, Walmart’s gross margins for the quarter declined 42 basis points, even as increased contributions from its advertising business helped offset some of the pressures on the supply chain. Walmart and other retailers are aggressively chasing advertising dollars from mainstream brands, touting their wealth of buyer data and top media space on their websites and in stores.

Some analysts have also warned of a hit margin during the holiday season, with Evercore’s Greg Melich saying supply chain issues or inflation could cause Walmart to drop 10 to 30 basis points from at its fourth quarter gross margin in the United States.

Shares of the world’s largest retailer fell about 3%.

Total revenue grew 4.3% better than expected to $ 140.53 billion and, on an adjusted basis, it gained $ 1.45 per share, 5 cents above Wall’s expectations. Street.

Reporting by Aishwarya Venugopal in Bengaluru and Richa Naidu in Chicago; Editing by Arun Koyyur, Kirsten Donovan and Nick Zieminski

Our Standards: Thomson Reuters Trust Principles.


Source link

Comments are closed.