Yet, big box retailer Walmart struck a cautious tone, giving a lower-than-expected profit forecast for the year, right before the holiday shopping season. This is despite announcing strong third quarter earnings but the retailer saw something changed at the back half of October.
“We saw [that spending] slipped a little bit, sometimes it could be related to unseasonal weather, it could be related to other things happening in the economy,” said Walmart’s CFO John David Rainey on Yahoo Finance. “So we called that out, it’s a little different from what we were seeing for the first part of the year.”
Walmart stock dipped as much as 8% on on Thursday (Nov. 16) after the earnings release.
Still, Walmart topped analyst estimates for its third quarter earnings. The big box retailer’s adjusted earnings came in just one cent higher than estimates at $1.53 per share.
The retailer booked a revenue of $160.8 billion for its third quarter with total sales up 5.2% compared to last year—topping expectations of $159.13 billion.
In the US, Walmart’s same-store sales grew 4.9%, its eCommerce sales are also up 24%, led by pickup and delivery. Foot traffic also grew 3.4%. Walmart also found new revenue streams by selling ads and annual memberships to Walmart+ to rival Amazon Prime.
But it’s the excitement leading up to holiday sales that appears to be lackluster, as consumers seem to prefer to wait for sales before buying bigger-ticket items. “The shoulder periods around that is a little bit slower than what we’ve seen previously,” Rainey said.
US consumer resilience continues despite tightening finances
The US Census Bureau figures released on Wednesday show retail sales in October dipped 0.1% from September, but were overall up 2.5% compared to the previous year.
“The staying power of the American consumer has been the story of 2023, but financial conditions have tightened appreciably in recent months, curbing the purchasing power fueled by job and wage gains,” said National Retail Federation’s (NRF) chief economist Jack Kleinhenz in a statement.
But he is expecting to see “continued consumer resilience” for the holiday season to come.
The retail industry group saw core retail sales—that excludes automobile dealers, gasoline stations and restaurants—were up 3.1% through the third quarter compared to the previous year, and up 3.7% for the first 10 months of the year.
Those numbers are in line with NRF’s expectation that 2023 annual retail sales will grow about 4% over 2022.