Walmart swings to Q3 loss, beats on revenue and adjusted profit

Discount retail giant Walmart swung to a third-quarter loss on Tuesday, although it beat expectations for revenue, adjusted profit and same-store sales, and set a much better full-year outlook than anticipated.

The company, which operates 10,000 stores globally and still has a minority stake in UK grocer Asda, reported a net loss for the three months to 31 October of $1.88bn, or 66 cents per share, swinging from net income of $3.11bn or $1.11 cents per share a year ago.

Adjusted earnings, however, came in at $1.50 per share, which was well above the $1.32 per share pencilled in by analysts.

That figure came after non-recurring items, which included $3.3bn in charges including legal settlements over the US opioid crisis.

Revenue for the period was up 8.7% year-on-year at $152.81bn, above expectations for $147.67bn, while same-store sales jumped 8.2%, compared to the 3.6% consensus forecast according to FactSet.

Same-store sales at the company’s Sam’s Club membership wholesale chain were up 10%, compared to expectations for an 8.7% improvement.

Walmart’s cost of sales did rise more than revenue, however, by 10.1% to $115.61bn, with its gross margin narrowing to 24.3% from 25.3%.

Looking ahead, Walmart announced an improved outlook for the full year, with adjusted earnings per share now set to be down 6% to 7%, from a previous 8% to 10% decline.

Sales growth was now pencilled in at 5.5% for the full 2023 financial year, up from a previous 4.5%.

“We had a good quarter with strong top-line growth globally led by Walmart and Sam’s Club US, along with Flipkart and Walmex,” sand president and chief executive officer Doug McMillon.

“Walmart US continued to gain market share in grocery, helped by unit growth in our food business.

“We significantly improved our inventory position in the third quarter, and we’ll continue to make progress as we end the year.”

At 0740 EST (1240 GMT), shares in Walmart were up 6.68% in pre-market trading, at $147.64.

Reporting by Josh White for Sharecast.com.