Walmart holiday quarter sales top estimates, shares jump

February 19, 2019

By Nandita Bose

(Reuters) – Walmart Inc reported an estimate-beating jump in holiday quarter comparable sales on Tuesday as a strong economy boosted consumer spending and fueled more e-commerce purchases, sending shares of the world’s larger retailer up almost 5 percent.

The performance offered a glimpse into the health of the U.S. consumer as spending was helped by a strong labor market and cheaper gasoline prices.

“We still feel pretty good about the consumer. We haven’t seen much of a change,” Walmart Chief Financial Officer Brett Biggs told Reuters. “The data we are seeing still looks pretty healthy. Gas prices are down year over year, which helps.”

U.S. retail sales recorded their biggest drop in more than nine years in December, the government reported last week, as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018.

Overall sales for the 2018 U.S. holiday shopping season hit a six-year high as shoppers were encouraged by early discounts, according to a Mastercard report in late December.

Walmart sales at U.S. stores open at least a year rose 4.2 percent, excluding fuel, in the fourth quarter ended Jan. 31. The gain exceeded analysts’ expectations of 2.96 percent, according to IBES data from Refinitiv.

Sales were also boosted after federal officials distributed food stamp aid early due to the partial government shutdown, the company said.

Adjusted earnings per share increased to $1.41 per share, beating expectations of $1.33 per share, according to IBES data from Refinitiv.

Online sales jumped 43 percent during the quarter, in line with the previous quarter’s rise, helped by the expansion of Walmart’s online grocery pickup and delivery services and a broader assortment on its website.

The U.S. retailer, which overtook Apple Inc to become the third largest e-commerce retailer last year, is likely to capture a 4.6 percent share of the U.S. e-commerce market, behind eBay Inc and Amazon, according to research firm eMarketer.

Walmart repeated its forecast that fiscal year 2020 earnings per share would decline in the low single digits in percentage terms, compared with last year. Excluding the acquisition of Indian e-commerce firm Flipkart, it sees an increase in the low- to mid-single-digits.

Walmart has recorded 18 quarters, or over four straight years of U.S. comparable sales growth, unmatched by any other retailer.

The stock rose to $104.80, up 4.8 percent in premarket trading.

(Reporting by Nandita Bose in Washington; Editing by Jeffrey Benkoe)

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