Walmart (WMT) -) posted better-than-expected third quarter earnings Thursday, while lifting its full-year profit forecasts, but hinted at near-term consumer spending softness that sent shares sharply lower in early Thursday trading.
Walmart said adjusted earnings for the three months ending in October came in at $1.53 a share, up 2% from the same period last year and just ahead of the Street consensus forecast of $1.52 a share.
Group revenues, Walmart said, rose 5.2% from last year to $160.8 billion, again topping analysts' estimates of a $159.6 billion tally. U.S. same-store sales were up 4.9%, the retailer said, firmly ahead of Wall Street's 3.2% forecast.
CFO John David Rainey told Bloomberg that there's "still is pressure on the consumer", adding the retailer is "more cautious on the consumer than we were 90 days ago.”
Looking into the second half of the fiscal year, Walmart sees earnings in the region of $6.40 to $6.48 per share, a two cent improvement to the upper end of its prior forecast, with net sales rising between 5% and 5.5%.
$WMT
— *Walter Bloomberg (@DeItaone) November 16, 2023
🔸WALMART CEO FORECASTS POSSIBLE DEFLATION IN COMING MONTHS
"We had strong revenue growth across segments for the quarter, and we’re excited to get an early start to the holiday season," said CEO Doug McMillon. "From a Thanksgiving meal that costs less than last year, to great prices on fashion, toys, electronics, and seasonal decorations, we’re here to help families from around the world make this a special time."
"Looking ahead, our inventory is in good shape, the teams are focused, and our associates are ready to serve our customers and members whenever and however they want to be served,” he added.
Walmart shares, which hit an all-time high earlier this week, were marked 7.7% lower in mid-afternoon trading following the earnings release to change hands at $156.62 each, a move that would trim the stock's six-month gain to around 4.5%.
"Some of the near term cautious outlook is due to what we think was a slowdown for Walmart in the last two weeks of October. But, this was offset by a strong start to November, particularly in apparel, we believe," said D.A. Davidson analyst Michael Baker, who carries a 'buy' rating on Walmart stock.
"This could simply be due to weather. But, with this type of volatility, we think it does make sense for Walmart to be slightly more cautious on the consumer heading into the holiday season," he added. "And this potentially sets up for another beat, which has been Walmart's M.O. all year."
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