Walmart (WMT) Q3 2021 earnings beat

Earnings


Customers shop at a Walmart store on May 19, 2020 in Chicago, Illinois.

Scott Olson | Getty Images

Walmart reported third-quarter earnings on Tuesday that topped Wall Street’s expectations as customers continued to shop online and sent U.S. e-commerce sales soaring by 79%.

The discounter said customers are embracing the new ways of shopping they adopted during the global coronavirus health crisis. As the holiday shopping season begins, instead of browsing store aisles, more of them are shipping purchases to their homes, getting groceries dropped off at their doors or picking up online purchases by the curbside. 

Walmart did not provide an outlook, but the company’s CEO, Doug McMillon, said the popularity of the online shopping services will not fade away. 

“We’re convinced that most of the behavior change will persist beyond the pandemic and that our combination of strong stores and emerging digital capabilities will be a winning formula,” he told investors on an earnings call. “Customers will want to be served in a variety of ways and we’re positioned to save them money, provide the variety of product choices they’re looking for, and deliver the experience they choose in the moment.”

And, he added, the retailer had a strong quarter, despite “an unusual and softer back-to-school season and less benefit from government stimulus spending versus the first half of the year.”

He said the rising number of Covid-19 cases across the country “reminds us we must be vigilant” and urged elected officials to work together to help small businesses.

Shares of Walmart were down slightly midmorning Tuesday.

Here’s what the company reported for the fiscal third quarter ended Oct. 31:

  • Earnings per share: $1.34, adjusted vs. $1.18 expected, according to Refinitiv’s consensus estimates
  • Revenue: $134.7 billion vs. $132.2 billion expected by Refinitiv estimates
  • U.S. same-store sales: up 6.4% vs. gain of 3.9% expected by StreetAccount survey

In the quarter, Walmart reported net income rose to $5.14 billion, or $1.80 per share, from $3.29 billion, or $1.15 a share, a year earlier. Excluding items, the company earned $1.34 per share. Analysts were expecting Walmart would earn $1.18 per share, according to Refinitiv.

Total revenue grew by 5.2% to $134.7 billion from $128.0 billion a year earlier, exceeding Wall Street’s expectations of $132.2 billion.

Walmart’s same-store sales in the U.S. grew by 6.4%, higher than the increase of 3.9% expected by StreetAccount survey.

Walmart subsidiary, Sam’s Club, had a strong quarter, too. The membership warehouse club’s same-store sales increased about 11%, excluding fuel, and its e-commerce sales jumped 41%.

The retailer’s international business grew, but at a slower rate. Net sales in the third quarter were $29.6 billion, an increase of 1.3%. Excluding changes in currency rates, net sales would have been $30.6 billion, or a rise of 5%. Flipkart, an Indian e-commerce retailer that Walmart acquired two years ago, had a record number of monthly active customers.

The company said Covid-19 added about $600 million in incremental expenses in the third quarter, but were partially offset by a noncash impairment charge in the third quarter of last year.

‘Three to five years’ e-commerce growth

Spreading out Black Friday sales

Walmart’s stores will be closed on Thanksgiving, a day that’s been the kickoff to the holiday shopping season in previous years. Like other retailers, the discounter began holiday sales early because of the pandemic and has spread out its deals. It split up Black Friday into multiple store and online events instead of having a day of doorbusters.

“It just gives people more of an opportunity to shop throughout the season,” Biggs said. “It’s not so focused on one day.”

He said that helps spread out orders for Walmart, which must pick, pack and ship many of those purchases.

“Think about how you supply stores. It certainly takes pressure off of a system that’s typically geared toward a few days or a Black Friday weekend. All of that I think is a positive for us and for customers.”

Customers may celebrate differently, but McMillon said he expects they will still be enthusiastic about the holidays.

“While many family gatherings may be smaller, we do believe families want to decorate, celebrate, and enjoy food and gifts,” he said on the earnings call. “They want a sense of normalcy, and our traditions help bring some joy and comfort to this difficult year.”

Read the complete release here.



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