Walmart Takes Center Stage: Q3 Earnings Preview Signals Retail Giant’s Holiday Season Strength
As the holiday shopping season approaches, Walmart, the retail behemoth, is the focus of attention as it prepares to release its fiscal third-quarter earnings before markets open on Tuesday, November 19, 2024.
Wall Street analysts expect the company to report revenues of $167.72 billion and earnings per share of 53 cents, showcasing continued growth despite economic uncertainties.
Market Performance and Expectations
The Arkansas-based retail giant has shown remarkable resilience in 2024, with its stock price surging nearly 60% year-to-date, significantly outperforming the S&P 500’s 24% gain. Currently trading at $84.08, Walmart has achieved an impressive market value of $675.86 billion.
BMO Capital analyst Kelly Bania maintains an optimistic outlook, recently raising the price target from $80 to $100, citing strong U.S. comparable sales and consistent earnings performance. “Walmart’s decade of omni-channel investments is in the early stages of paying off,” Bania notes, recommending it as a core holding for investors.
Key Growth Drivers
Several factors contribute to Walmart’s continued success:
- E-commerce Expansion: The company reported a 21% year-over-year increase in global e-commerce sales last quarter, driven by improved store-fulfilled pickup and delivery services.
- Advertising Growth: Global advertising revenue jumped 26% in the previous quarter, representing a growing profit center for the company.
- Grocery Dominance: Since 2019, Walmart’s U.S. grocery sales have increased by 38%, with market share gains across all income levels.
Holiday Season Outlook
The National Retail Federation projects holiday spending for November and December to increase by 2.5% to 3.5% compared to 2023, reaching between $979.5 billion and $989 billion. While this growth rate is lower than last year’s 3.9% increase, it suggests continued consumer resilience.
Economic Context
The retail landscape presents a mixed picture.
- Inflation has moderated, with declining gas prices and stabilizing grocery costs.
- President-elect Trump’s proposed tariffs on Chinese imports have raised concerns about potential price increases.
- A shorter holiday season and unseasonably warm weather could impact sales.
Looking Ahead
Walmart’s previous guidance for the full year remains optimistic, with projected sales growth of 3.75% to 4.75% and adjusted earnings between $2.35 and $2.43 per share. The company’s performance will likely serve as a crucial indicator of consumer health and retail sector strength heading into the critical holiday shopping season.
CEO Doug McMillon previously emphasized the company’s diversification strategy: “Our newer businesses, such as marketplace, advertising, and membership, are contributing, diversifying our profits, and reinforcing the resilience of our business model.”
As retailers navigate economic uncertainties, Walmart’s earnings report will provide valuable insights into consumer spending patterns and the overall health of the retail sector as we enter the crucial holiday shopping period.