Coverage: Walmart sales grow ahead of the holidays

Walmart reported better-than-expected third-quarter earnings amid solid same-store sales and accelerating e-commerce growth even as overall revenues were in line.

Elaine Low of Investor’s Business Daily had the news:

Estimates: Wall Street had expected Walmart earnings to rise 2% to $1.02 a share on 1.3% revenue growth to $124.856 billion, according to Zacks Investment Research. Some consensus forecasts had sales above $125 billion.

Results: Walmart earnings climbed 8% to $1.08 per share. Revenue rose 1.4% to $124.89 billion. U.S. same-store sales advanced 3.4%. E-commerce sales rose 43% vs. a year earlier after a 40% online sales jump in Q2.

Outlook: Walmart sees full-year EPS of $4.75-$4.85, up from its prior target of $4.65-4.80 including its recently acquired Flipkart. Analysts expected $4.77. Given the Q3 EPS beat, Walmart essentially is leaving its holiday Q4 EPS target alone.

“We have momentum in the business as we execute our plan and benefit from a favorable economic environment in the U.S.,” CEO Doug McMillon said in a statement.

Lauren Thomas and Courtney Reagan of CNBC.com noted that the company’s stock still fell:

Earnings were fueled by robust e-commerce sales, as the company continues to gobble up online brands to compete with Amazon in categories like apparel and home goods, while also scaling its grocery business.

Comparable sales climbed for their 16th consecutive quarter, as existing Walmart shoppers flocked to its stores more frequently and added more to their baskets. The big-box retailer’s revenue fell short of analysts’ estimates, however, due to currency headwinds. It’s taken a hit in recent quarters due to increased investments overseas.

Walmart shares ended the day down nearly 2 percent. With Thursday’s losses, the stock is up more than 10 percent from a year ago, bringing Walmart’s market cap to roughly $291.5 billion.

Sarah Nassauer and Suzanne Kapner of The Wall Street Journal reported that narrowing profits may hurt the company:

Shares of Walmart and other retailers declined on Thursday as investors worried that profits aren’t keeping pace with sales gains because companies are investing in workers’ wages and lowering prices to compete with Amazon. Despite its sales growth, Walmart’s profit margins narrowed in the latest quarter.

“Profitless growth is now the best case” for most retailers this year, Simeon Gutman, an analyst at Morgan Stanley, said in a note to clients.

Among traditional retailers, there is a divide between those that are adapting to the rise of online shopping and those still struggling to attract customers. Sears Holdings Corp. filed for bankruptcy protection last month capping years of declining sales and store closures.