Walmart store , Mountain View, CA

Walmart reports Q3 earnings, beats Wall Street’s expectations.
The retailer said its size is helping it manage through supply chain snarls and inflation.

Walmart reported its third-quarter results on Tuesday morning. Walmart Inc’s shares on Tuesday suffered their biggest intraday drop since May after high labor and supply chain costs ate into quarterly margins, even as the world’s biggest retailer raised its annual sales and profit forecast.

Total revenue was $140.5 billion, up 4.3%, negatively affected by approximately $9.4 billion related to divestitures. Excluding currency, total revenue would have increased 3.3% to $139.2 billion. Total revenues increased 4.3% YoY to $140.5 billion, topping estimates of $135.43 billion.

Walmart’s U.S. eCommerce sales grew 8% for the quarter and 87% on a two-year stack. By operating segment, Walmart U.S. posted a good result with net sales increasing 9.3% YoY to $96.6 billion, beating estimates of $94.754 billion. Market share gains in the grocery business were an important driver of the better than expected sales results. Food sales increased $3.6 billion during the quarter, representing the strongest quarterly growth rate in six quarters.

Walmart International’s net sales were $23.6 billion, a decrease of $5.9 billion, or 20.1%, negatively affected by $9.4 billion related to divestitures. Changes in currency exchange rates positively affected net sales by approximately $1.3 billion. Flipkart, China, and Mexico delivered strong growth in eCommerce.

Consolidated gross profit rate decreased 42 basis points, primarily due to increased supply chain costs, a higher mix of lower margin fuel business in the U.S., and a shifting international format mix.

Consolidated operating expenses as a percentage of net sales declined 4 basis points reflecting strong sales growth and lower expenses for COVID-19, offset by investments in wages.

Consolidated operating income was $5.8 billion, an increase of 0.2%, negatively affected by $0.4 billion related to divestitures, or about 750 basis points.

On the bottom line, adjusted diluted earnings per share increased 8.2% YoY to $1.45, beating estimates of $1.40.

“There’s a level of excitement in the air,” he said on the company’s earnings call. “You can feel it. I’ve been walking away from these stores with a recurring thought, ‘We’re ready, we have the people, the products, and the prices to deliver a great holiday season.’”

Walmart’s net income fell to $3.11 billion, or $1.11 per share, from $5.14 billion, or $1.80 per share, a year earlier. Excluding items, the company earned $1.45 per share. Analysts were expecting Walmart would earn $1.40 per share, according to Refinitiv.

Inflation is hitting consumers as they go about daily routines, from filling up the gas tank to stocking the refrigerator. Annual inflation rose at its fastest pace in more than three decades in September, according to the Commerce Department.

About Walmart

Walmart Inc. (NYSE: WMT) helps people around the world save money and live better – anytime and anywhere – in retail stores, online, and through their mobile devices. Each week, approximately 220 million customers and members visit approximately 10,500 stores and clubs under 48 banners in 24 countries and eCommerce websites.

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With the fiscal year 2021 revenue of $559 billion, Walmart employs 2.2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy, and employment opportunity. Additional information about
Walmart can be found by visiting