Finally! Some good news from a retailer getting ready for the holidays. Walmart reported sales and earnings on Tuesday that topped Wall Street's forecasts.
Walmart is fighting the losing trend. Several prominent retailers have already reported poor results recently, including Macy's (M), Gap (GPS) and Nordstrom (JWN).
That has led to concerns that retailers may have to use massive discounts to lure shoppers in their stores this holiday season, promotions that could crush these companies' already wafer-thin profit margins.
Still, it's not as if expectations were all that high for the company. Walmart warned last month that sales would be weak and that wage hikes it announced earlier this year would hurt its profits. The stock is down 33% this year, making it the worst performer in the Dow.
Warren Buffett's Berkshire Hathaway (BRKB) disclosed on Monday that it cut its stake in the retailer in the third quarter, before the earnings warning. Walmart did report its fifth consecutive quarter of same-store sales growth in the U.S. And store traffic rose 1.7%. Those are encouraging signs.
CEO Doug McMillon said in the company's earnings release that the company is "taking the right steps to win with customers." But he conceded that Walmart still has "work to do." Competition from Amazon (AMZN, Tech30) has also hurt Walmart, along with other retailers. Walmart is investing heavily in its own online retailing operations. Growth, however, has been slow.
The company said that e-commerce sales were up only 10% from a year ago. Walmart cited "pressures in key international markets." The strong dollar is a problem for Walmart -- which generates about a quarter of its sales overseas. Nonetheless, Wall Street seemed relieved that the company's results were not worse. Neither was its outlook.
The company said that it expects fourth quarter earnings to be in a range of $1.40 to $1.55 a share. The current consensus estimate of analysts for the quarter is $1.43 a share.
Shares of Walmart (WMT) rose more than 2.5% in premarket trading on the news.
Walmart is the first of several big retailers to report its quarterly sales and outlook this week. Target (TGT) and Best Buy (BBY) are on tap to release their results later this week.
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