Walmart Inc. is heading into the holiday season on a roll. The retailer on Thursday announced its third quarter financial figures, including a 43% growth in its e-commerce sales, which it said were helped in part from a website redesign. That comes on the heels of 40% online sales growth in the second quarter.
Comparable sales for Walmart stores in the U.S., a key performance barometer, rose 3.4% in the third quarter, beating analysts’ estimates. The retailer received its biggest boost ever from its online unit, which has attracted more customers thanks to a website redesign, more delivery options and new products from Nike Inc. and other top brands.
That’s helped put distance between itself and retailers like J.C. Penney Co., whose sales missed expectations Thursday.
“Our performance was good across the box,” Brett Biggs, the retailer’s chief financial officer, said in an interview. “We feel good about how the year will finish out.”
With Black Friday eight days away, Walmart is optimistic about its prospects for the rest of the year thanks to a number of key moves, including its growing omnichannel offerings, its extension of free two-day shipping on orders of at least $35 to items sold by marketplace merchants, as well as the addition of intimate apparel merchant Bare Necessities and plus-size apparel retailer Eloquii Design Inc.
“The holidays are fast approaching, and we have integrated plans in place with our stores and online to continue taking market share,” said Doug McMillon, Walmart’s president and CEO, on a conference call with analyst. “We’ve added new tools for customers and associates to improve speed and efficiency.”
For instance, Walmart recently rolled out Check Out with Me, which enables in-store shoppers who are purchasing a few items to “skip the line” and check out with an employee in an aisle. Associates, who will be available in the busiest parts of the store, will swipe a shopper’s credit card with a handheld device and then customers can leave the store without waiting in a cashier line. The retailer also recently began providing a store map for each store in the Walmart app. Shoppers can search for a product in the Walmart app and the map will show the item’s location in the store.
The retailer also is focused on bolstering its omnichannel offerings. It currently has nearly 2,100 grocery pickup locations and it expects to have roughly 700 pickup towers—which are kiosks shoppers can use to pick up their online orders—in place by the end of its fiscal year.
“As we’ve learned to do pickup well, it has unlocked our ability to provide delivery,” McMillon said, noting that by the end of the year the retailer will deliver items from about 800 of its U.S. stores.
Walmart is poised to be a big winner in what is shaping up to be the best Christmas shopping season in recent memory. Walmart’s wide variety of products—from toys to turkeys—and low prices both in stores and online have positioned it to grab new sales as retailers like Toys R Us Inc. have faded from the scene. Walmart’s position as the nation’s top grocer has also provided a bulwark against Amazon, which is still figuring out its food strategy more than a year after acquiring Whole Foods Market.
“Walmart will be one of the pace-setters this holiday season,” Moody’s Corp. analyst Charlie O’Shea said in a note.
As its food business goes, so goes Walmart. And it’s been going well lately thanks to price cuts, refurbished produce displays and a rapid rollout of curbside grocery pickup, now available at nearly 2,100 stores. Shoppers like the convenience, and the service has attracted new customers as well as higher average orders.
“Walmart has been exceptional at quickly adapting to the realities of modern retailing,” Neil Saunders, an analyst at GlobalData Retail, said in a note.
And the redesign of Walmart’s once-clunky site has boosted Walmart.com’s traffic and helped its market share grow in every major online category, according to GlobalData Retail. Those sales come at a cost to profitability, though, as online orders are more expensive to fulfill. Gross profit margins narrowed once again in the quarter, also weighed down by high transportation costs.
Looking ahead, Walmart also needs to avoid the supply-chain snafus that its website suffered during last year’s holiday season, which hampered online growth and worried investors.
“There is more work to do here in making Walmart.com the first port of call for shoppers who are very used to defaulting to Amazon,” analyst Saunders said.
The retailer boosted its full-year adjusted earnings per share outlook to $4.75 to $4.85 from $4.65 to $4.80 earlier. Walmart now sees U.S. same-store sales growing at least 3% this year, better than the previous guidance of “about 3%.”
Walmart is No. 3 in the Internet Retailer 2018 Top 500.
Bloomberg News contributed to this story