Walmart Shares Up after Holiday Sales Rise Above Forecasts

Shares of Walmart Inc. surged nearly 5 percent on Tuesday after the US retail giant posted better-than-expected holiday sales in the fourth quarter of fiscal 2019.

For the quarter ended January 31, Walmart’s net income rose to $3.69 billion, or $1.27 per share, compared with $2.18 billion or $0.73 a share reported in the previous year.

Revenue ended at $138.79, advancing almost 2 percent from $136.27 billion a year earlier and exceeding forecasts of $138.7 billion.

Walmart Chief Executive Doug McMillion stated that a favorable economic environment has been helping boost the company’s sales and market share.

Holiday Quarter Celebration

Walmart’s holiday sales also blew past expectations as a strong economy resulted in higher consumer spending and further e-commerce purchases.   

Same-store sales in the US were up by 4.2 percent over holiday stretch, beating forecast increase of 3.2 percent.

The data offered a hint on the health of the US consumer as spending received a boost from a strong labor market and cheaper gasoline costs.

Walmart Chief Financial Officer Brett Biggs stated that they still feel pretty good about the consumer and they have not seen much of a change.

The news sent the grocery store operator’s stock higher by 4.5 percent in pre-market trade on Tuesday, before easing to trade up by 3.3 percent to $103.34. Shares of Walmart have gained 7 percent so far this year.

Traffic at stores added only 0.9 percent during the fourth quarter, compared with 1.6 percent growth generated the prior year, according to Walmart.

Average shopper’s ticket, on the other hand, rose 3.3 percent, compared to 1 percent a year ago.

The company’s e-commerce sales improved 43 percent in the quarter, in line with growth posted during the previous quarter. Walmart said for the year it achieved online revenue growth of 40 percent, which it had been aiming for.

The US retailer also kept its fiscal 2020 outlook, which it announced in October, unchanged.

Net sales growth is expected to be at least 3 percent as a result of deconsolidation of its Brazilian operations and less tobacco sales at its membership-only retail warehouse club Sam’s Club. Walmart sees net sales to add around 5 percent worldwide.

US same-store sales, meanwhile, is estimated to advanced 2.5 percent to 3 percent, while operating profit for the fiscal 2020 is predicted to weaken slightly. Excluding the Flipkart deal, Walmart expects gains for this year and the next.

As regards 2019 e-commerce sales growth, the company is targeting 35 percent, which would be lower than what it was able to reach in 2018.

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