Walmart earnings top expectations as customers’ new shopping habits send e-commerce sales soaring 79%

Walmart reported third-quarter earnings on Tuesday that topped Wall Street’s expectations as customers continued to shop online and sent U.S. e-commerce sales soaring by 79%.

The discounter said customers are embracing the new ways of shopping they adopted during the global health crisis, and as the holiday shopping season begins. Instead of browsing store aisles, more of them are shipping purchases to their homes, getting groceries dropped off at their doors or picking up online purchases by the curbside. 

Walmart did not provide an outlook, but the company’s CEO Doug McMillon said the popularity of the online shopping services will not fade away. 

“We think these new customer behaviors will largely persist and we’re well positioned to serve customers with the value and experience they’re looking for,” McMillon said in a news release.

Shares of Walmart were up about 1% in premarket trading.

Here’s what the company reported for the fiscal third quarter ended Oct. 31:

• Earnings per share: $1.34, adjusted vs. $1.18 expected, according to Refinitiv’s consensus estimates
• Revenue:  $134.7 billion vs. $132.2 billion expected by Refinitiv estimates
• U.S. same-store sales: up 6.4% vs. gain of 3.9% expected by StreetAccount survey

In the third quarter, Walmart reported net income to $5.14 billion, or $1.80 per share, from $3.29 billion, or $1.15 a share, a year earlier. Excluding items, Walmart earned $1.34 per share. Analysts were expecting Walmart would earn $1.18 per share, according to Refinitiv.

Total revenue grew by 5.2% to $134.7 billion from $128.0 billion a year earlier, exceeding Wall Street’s expectations of $132.2 billion.

Walmart’s same-store sales in the U.S. grew by 6.4%, higher than the increase of 3.9% expected by StreetAccount survey.

Walmart has been one of the beneficiaries of stay-at-home trends during the pandemic — a trend that continued in the most recent quarter, even without a boost from government stimulus dollars. Since the spring, Americans have turned to its stores and website for groceries, cleaning supplies and items to pass the time, from puzzles to bicycles. 

Walmart CEO Brett Biggs said the shift in purchasing patterns at the start of the pandemic amounted to “three to five years of acceleration in e-commerce, really in a period of weeks and months.”

But, he added, “people are still going to want to stop and shop at stores longer term so we like the combination of those assets.”

In the coming months, Walmart will face new challenges. Coronavirus cases and hospitalizations are rising across the country during the holiday shopping season. Starting Saturday, Walmart said it would resume counting and restricting the number of customers in the store to make sure they don’t exceed capacity limits. Some grocers, including Kroger, Wegmans and Publix, have reinstated purchasing limits on toilet paper, disinfecting spray and hand sanitizer.

Walmart’s stores will be closed on Thanksgiving, a day that’s been the kickoff to the shopping season in previous years. Like other retailers, the discounter began holiday sales early because of the pandemic and has spread out its deals. It split up Black Friday into multiple store and online events instead of having a day of doorbusters.

“It just gives people more of an opportunity to shop throughout the season,” Biggs said. “It’s not so focused on one day.”

He said that helps spread out orders for Walmart, which must pick, pack and ship many of those purchases.

“Think about how you supply stores. It certainly takes pressure off of a system that’s typically geared toward a few days or a Black Friday weekend. All of that I think is a positive for us and for customers.”

Read the complete release here.