Walmart Joins Target In Sending Out Not-So-Merry-And-Bright Holiday Vibes

After Target Corporation TGT posted a significant earnings gain but also left out the ‘drum rolls’ from its holiday quarter outlook, Walmart Inc WMT also topped third quarter earnings and revenue estimates along with giving out a cautious guidance. Upon the report, Walmart shares tanked more than 7% during morning trading despite the retail giant making money in new ways such as through selling ads and its Walmart+ membership with which it is challenging no other than the e-commerce titan, Amazon.com Inc AMZN. 

Third Quarter Highlights

For the quarter that ended on October 31st, Walmart reported revenue of $160.80 billion, topping LSEG’s estimate of $159.72 billion. Revenue rose on the back of the grocery business that thrived from high inflation and strong digital sales. Walmart U.S. comparable sales rose 4.9% YoY, followed by 3.8% YoY growth reported by Sam’s Club. U.S. shoppers both visited and spent more, with transactions rising 3.4% and the average ticket growing 1.5% YoY. Also, U.S. e-commerce sales rose 24% YoY and 15% YoY globally. Walmart’s ad business, Walmart Connect, rose 26% YoY. 

During the third fiscal quarter, Walmart made a net income of $453 million or 17 cents per share with adjusted earnings per share amounting to $1.53, topping the expected $1.52. 

Walmart provided a slightly lower-than-expected annual guidance 

Although higher than the previously given range, Walmart guided for annual adjusted earnings per share in the range between $6.40 and $6.48 which is lower than LSEG’s expectation of $6.48. Walmart also raised its outlook for consolidated net sales that it expects to grow between 5% and 5.5%. Walmart CFO John David Rainey stated that the trends observed in October made management rethink the health of the company’s consumers. But when the holiday quarter kicked off with promotions, sales picked up and gained momentum.

Relief Is Coming Just In Time For The Holidays, But Only For Shoppers

The good news that Walmart, Target and Home Depot HD provided is that inflation has waned. Walmart also added that for some categories, even deflation has taken its place, which is beneficial for shoppers, but not the retailer’s top line. Like Target, Walmart observed the consumer behavior trend of being on the lookout for deals. With consumers being willing to patiently wait for an item’s price drop, Target and Walmart observed a drop in purchases being made before and after a sales event.  

A Not-So-Merry Holiday Season Seems To Be Ahead

Walmart will be racing against Target and Amazon for who will be making the fastest holiday deliveries. Amazon has bounced back after a weak 2022. With its same-day-sites and additional smaller fulfillment centers, Amazon is putting up quite a challenge for Walmart. But Target and Walmart are not sitting back while Amazon gets products to its customers within hours. In its much better than expected third quarter report, Target referred to its same-day deliveries as its growth driver. Meanwhile, Walmart is adding automated fulfillment centers near its existing stores, along with additional efforts to increase the speed in which goods go through its system. But, when even the nation’s largest grocer is cautious about the holiday season, this undoubtedly gives out sad Santa vibes.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.