By Nandita Bose
NEW YORK (Reuters) – Walmart Inc. has published its best quarterly sales growth in the US in a decade and increased sales and earnings prospects for the full year on Thursday, as a result of which shares rose as a leap in online and shopping purchases showed that it can maintain itself against Amazon.com Inc.
& # 39; s The world's largest retail chain is known for its sprawling stores, a factor that could have stopped working if customers migrated online. But Walmart is also the best American grocery, which lures consumers to visit stores, where they can also make other impulse purchases.
Walmart has also overhauled and worked on its website to use physical locations as distribution points for online orders for groceries and other goods, thereby retaining buyers who are increasingly expecting fast, cheap shipping.
Consumers spent more in the second quarter on categories such as groceries, clothing and seasonal items, which caused sales to start again after a slow start in April. Walmart has recorded growth in the US for four consecutive years, unrivaled by another retailer.
"We saw strong performance in fresh food," said Greg Foran, the US chief executive, at a conference call on prices, praising sales in products, meat and bakery. The turnover of the supermarket rose the most in nine years.
Walmart benefited from better weather in May, the first month of the quarter, when the largest quarterly increase in customer traffic was reported to Reuters by Chief Financial Officer Brett Biggs in more than six years. 19659002] Rising wages, lower unemployment and tax cuts that have put more money into the pockets of American consumers this year have also helped.
"(This) is a reflection of Walmart's various in-store and online initiatives, and probably an indication of solid market share gains and an overall healthy consumer background," said Credit Suisse analysts in a note.
The growth of Walmart's American e-commerce was higher than in previous quarters, driven by a redesign of the website and a continuous expansion of online grocery shopping. 19659002] However, revenue growth has entailed some costs, with the company experiencing persistent pressure on margins due to price decreases, higher freight costs due to a shortage of truck drivers and investments in e-commerce.
W almart & # 39; s shares were up 10 percent at $ 99.08. The company's share has fallen by around 9 percent since the beginning of the year.
STRONG ONLINE SALES
Walmart increased sales and earnings prospects for the full year, excluding the potential impact of the acquisition of the Indian e-commerce company Flipkart, which is still closing.
E-commerce sales grew 40 percent in the quarter, up 33 percent in the previous period, and the retailer said online sales in the US are on track and 40 percent for the full year.
Walmart now offers curbside to pick up online shopping in 1800 stores in the US, and the service brings in new customers, according to Biggs.
A sharp decline in online sales during the crucial holiday months had frightened investors who were worried that the retailer would not be able to follow Amazon.
Cowen & Co estimates that 86 percent of Walmart shoppers also shop in Amazon.
However, the losses of e-commerce could be higher than last year this year, because the company continues to invest in the company, said the main contractor of e-commerce of Walmart Marc Lore during the call.
Gross margins declined for the fifth consecutive quarter and fell 17 basis points, the company said.
SEA SALES RADIATION
International sales increased by 3.1 percent to $ 29.2 billion at constant exchange rates, helped by strong comparable sales in Mexico, Great Britain, Canada and China . British supermarket chain Asda, Walmart, up 2.6 percent of the quarterly sales on Thursday, ahead of an expected takeover by bigger rival Sainsbury's.
Walmart sold a majority stake in ASDA to Sainbury & # 39; s in April.
In June, Walmart sold a 80 percent stake in its Brazilian operations to private equity firm Advent International. It paid $ 16 billion for a majority stake in Flipkart.
The retailer also reached agreements to sell his banking operations in Walmart Canada and Walmart Chile.
Sales at the US open at least a year rose 4.5 percent, excluding fuel price fluctuations, higher than analyst forecasts of 2.38 percent, according to Thomson Reuters I / B / E / S.
Excluding one-time items such as a loss in related to the sale of a majority stake in Walmart Brazil, Walmart earned $ 1.29 per share, ahead of analyst expectations of $ 1.22 per share.
Total sales increased 3.8 percent to $ 128 billion, won estimates of $ 125.97 billion.
For the full year, Walmart expects between $ 4.90 and $ 5.05 per share, up from a range of $ 4.75 to $ 5 per share. The retailer said that sales in the comparable store in the United States would increase by about 3 percent in the year 2019, compared to a previous target of at least 2 percent.
(Reporting by Nandita Bose in New York, Editing by Frances Kerry and Meredith Mazzilli)
(This story is not edited by Business Standard staff and is automatically generated by a syndicated feed.)