The news: Walmart reported better-than-expected revenues in Q3 and raised its full-year outlook as the retailer’s low prices continued to attract shoppers across the income spectrum.
However, Walmart recorded a $3.3 billion charge stemming from opioid-related legal settlements, causing a $1.8 billion net loss for the quarter.
Inventory problems recede: Walmart made good progress this quarter in reducing the excess inventory it had been saddled with since the beginning of the year due to an unforeseen shift in consumer spending patterns.
Everyday low prices: Walmart’s value proposition was key to its strong performance this quarter, enabling it to grow market share in grocery and expand its consumer base.
Looking ahead: While Walmart’s ability to right its ship in less than a year is encouraging, the retailer’s projected holiday sales are less so. Like Amazon, Walmart anticipates sluggish growth this season: The company expects comparable sales to rise just 3% in Q4, excluding fuel, below the 3.5% growth expected by analysts polled by StreetAccount.
But there are signs inflation is beginning to ease in some categories, which will help Walmart keep costs down and give it some flexibility on margins. CEO Doug McMillon noted on the company’s earnings call that Walmart has “seen some downward movement in general merchandise” pricing, a trend he expects will continue into the next year.
Walmart’s retail muscle and dominant position in grocery put it in a strong position to continue growing market share in Q4 and beyond, especially as inventory and inflationary pressures ease.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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