The good times continue at Walmart (WMT) as inflation-weary shoppers continue to look for value.
On Tuesday, the world’s largest retailer posted third-quarter financial results that easily exceeded Wall Street expectations. Revenue of $169.59 billion exceeded analyst estimates of $167.5 billion. Adjusted earnings per share exceeded estimates by 5 cents to $0.58.
“We had a strong quarter and continued our momentum,” CEO Doug McMillon said in a statement. “In the US, in-store volumes grew, in-store pickup grew faster and in-store delivery grew even faster.”
Shares of Walmart rose more than 4% in premarket trading on Tuesday. The stock is up 60% year to date, outperforming the Dow Jones Industrial Average’s (^DJI) 15% gain.
Here’s what Walmart posted for its third-quarter fiscal 2025 results, compared to Bloomberg’s consensus estimates:
Gain: $169.59 billion versus $167.5 billion
Adjusted earnings per share: $0.58 vs. $0.53
Overall same-store sales growth: 5.5% vs. 3.81%
Walmart US same-store sales growth: 5.3% vs. 3.68%
Traffic: 3.1% vs. 2.82%
Ticket growth: 2.1% vs. 1.20%
E-commerce growth: 22% vs. 2.22%
Sam’s Club US same-store sales growth: 7.0% vs. 4.22%
Walmart US saw same-store sales increase 5.3%, driven by higher foot traffic, up 3.1%, and higher average ticket, up 2.1%. That compares with a 4.9% increase posted this time last year.
In the US, e-commerce sales rose 22%, while advertising unit Walmart Connect grew 26%. Membership income also saw a double-digit increase.
The retailer posted gains across all product categories and income cohorts, driven mainly by higher-income households.
Grocery category sales grew by mid-single digits as “food units reached their highest level in four years,” mainly driven by pantry items. Personal care products and household cleaning products also experienced sales growth. Penetration of private label products rose 80 basis points, doubling early this year with new lines such as BetterGoods.
Groceries make up about 60% of U.S. sales for Walmart.
Walmart indicated that momentum for the holiday shopping season continues.
The retail giant has raised its expectations for fiscal year 2025 for the third time.
Net sales are now expected to grow between 4.8% and 5.1%. Walmart previously targeted sales growth of 3.75% to 4.75%. Before the start of the year, Walmart had expected sales growth of 3.0% to 4.0%.
Adjusted operating income is expected to grow 8.5% to 9.25%, compared to previous expectations of 6.5% to 8.0%.
Full-year adjusted earnings per share are expected to be in the range of $2.42 to $2.47, above the high end of the previously expected range of $2.35 to $2.43.
The Walmart logo is seen on a truck trailer on a highway in the United States on July 12, 2024. (Photo by Jakub Porzycki/NurPhoto via Getty Images) ·NurPhoto via Getty Images
Walmart has maintained an edge in value, offering prices about 10% to 12% cheaper for an average basket of food, Goldman Sachs analyst Kate McShane told Yahoo Finance ahead of the results.
In fact, the strategy is to “give Amazon (AMZN) a lot of competition,” LSEG Director of Consumer Research Jharonne Martis told Yahoo Finance ahead of the results.
“They give the consumer the opportunity to shop the way he or she wants, whether you order it on your mobile… and pick it up at the store on the way home or just have it delivered there from the store to your home ,’ Martis said.
To that end, Walmart’s U.S. health and wellness business grew sales in the mid-teens, driven by an increase in pharmacy prescriptions. Sales of GLP-1 drugs contributed approximately 1% to the segment’s revenue.
The general goods category continued to experience weak sales despite consumer caution, driving sales up in the low single digits.
Walmart’s alternative revenue streams through membership models such as Walmart+ and its Walmart Connect advertising channel also continue to perform well.
The e-commerce marketplace is “getting very close to profitability,” McShane said. In the quarter, global e-commerce sales grew 27% overall, driven by in-store pickup and marketplace sales.
Membership and other revenues increased 16.1% year over year to $1.59 billion.
“There is more buy-in from the investor base [in] the alternative revenue streams that Walmart is looking for… that they are faster growing businesses with higher margins that should drive better profitability for the business over the longer term,” McShane said.
And investors are keeping an eye on Walmart International. Kathryn McLay, who was previously CEO of Sam’s Club, took over last September following the retirement of Judith McKenna.
The company is targeting key markets such as China, India and Mexico and is doubling down on low prices.
International sales grew 8.0% to $30.3 billion in the third quarter, led by the growth of Walmart’s majority-owned Indian e-commerce company Flipkart. Companies in Mexico, known as Walmex, and China reported strength from Sam’s Club and e-commerce.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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