The company has spruced up its in-store apparel offering and built out an online marketplace while expanding delivery and curbside pick up and layering in newer businesses, like online advertising.
The result has been a very smooth trip through a choppy retail landscape.
Walmart, which also operates Sam’s Club, beat third-quarter sales and profit estimates as the flagship Walmart U.S. business drove comparable sales up 5.3 percent on top of a 4.9 percent gain a year earlier and its global e-commerce business grew by 27 percent.
Doug McMillon, president and chief executive officer, told analysts on a conference call that Walmart’s transaction counts and unit volumes grew as the company gained market share in the U.S. with both grocery and general merchandise.
“Households earning more than $100,000 made up 75 percent of our share gains,” McMillon said.
It’s the company’s brick-and-click omnichannel approach that’s helping Walmart go after fashion shoppers.
“Over the years, we had a really strong market share in categories like toys, bicycles, but we had a lower market share in a lot of the fashion categories,” McMillon said. “That’s basically just the customer telling us over the years, ‘I’d rather buy my apparel somewhere else.’ But in an omni world, we have an opportunity with brands, we have an opportunity with presentation to increase the amount of market share we have in some of those categories where we should have had a higher share all along.”
As the company has grown its e-commerce, its fashion assortment has grown and higher-end shoppers have come in.
McMillon thinks it’s a trend that sticks.
“We have more opportunity in fashion areas than we do in basic areas, and that’s always been true as it relates to price versus convenience,” McMillon said. “Everybody wants to save money and everybody wants to save time, but it’s a continuum.
“And those that have more discretionary income and want to save time are liking what we’re doing with both pickup and delivery,” he said. “That’s one of the things that makes this moment in time different.”
The CEO pointed to the company’s growth with its Walmart+ membership program and the traction the store’s gotten with its remodels.
“It gives me more optimism that this is something that’s going to last a long time,” he said, calling this “a different inflection point.”
Walmart’s been working to sharpen its apparel offering.
Certainly, the company’s coming into the holiday season on a roll.
Walmart’s third-quarter net income jumped to $4.6 billion, or 57 cents a share — up from just $453 million, or 6 cents, a year earlier, when results were depressed by losses tied to the company’s investments in JD.com and Symbotic.
Adjusted earnings per share came in at 58 cents for the quarter, 5 cents ahead of the 53 cents analysts forecast, according to Yahoo Finance.
Revenues for the three months ended Oct. 31 rose 5.5 percent to $169.6 billion, easily outstripping the $166.6 billion analysts projected.
While retail expectations in general are muted headed into the holiday season, Walmart is feeling more bullish.
The retailer raised its outlook for the year and is now forecasting a sales increase of 4.8 percent to 5.1 percent, up from the 3.8 percent to 4.8 percent projected in August.
Earnings per share are now pegged at $2.42 to $2.47, up from the $2.35 to $2.43 previously forecast by the company.
Investors traded shares of Walmart up 3 percent to $86.59 on Wall Street, giving the company a market capitalization of $697 billion.
For decades, Walmart has had a reputation as a very large, very savvy operator of brick-and-mortar stores.
But now it’s proving to be agile despite its scale.
“We build new tech more effectively than we used to, and we’re doing it with more speed,” McMillon said. “This is a more customer and member centric organization.”
One of his call outs was a new Sam’s Club store in Grapevine, Texas, where members use an app to scan goods as they pick them up and then leave through an exit with computer vision technology.
“Just imagine a 150,000-square-foot Sam’s Club with no traditional checkouts,” McMillon told analysts.
Walmart is also working with artificial intelligence and seeing what it can do.
“I’m a little hesitant to talk about AI because I know someone will hear this in the months and years to come and chuckle about how old school it sounds, given how fast things are changing,” the CEO said. “But it’s important to convey that we’re learning and applying generative AI, AI and machine learning to solve the practical opportunities right in front of us.
“Our data sets are valuable, and we’re learning to put them to work, to improve the customer and member experience and assist our associates as they do their daily work,” he said.
Walmart is using AI to improve its product catalogue by helping customers shop with a personal shopping assistant.
“We’re racing to improve all the things that people love about shopping and remove or diminish all the things they don’t,” the CEO said.
