Walmart shares jumped as much as 8.5% Tuesday morning after the world’s largest retailer reported strong third quarter profits and revenue amid the tumultuous economic environment. The company also raised its full year outlook.
The news from Walmart, which is considered a barometer of spending given its more than $400 billion market cap, bolstered the notion that an increasing number of consumers are turning to the discount chain to cut down on spending amid elevated inflation.
Despite the strong quarter, the Arkansas-based company did take a financial hit. Walmart agreed to pay $3.1 billion to settle lawsuits nationwide over the impact of prescriptions its pharmacies filled for powerful prescription opioid painkillers. The agreement must still be approved by 43 states to take effect.
The company lost $1.79 billion, or 66 cents per share, during the three-month period ending on Oct. 31, including the opioid settlement. A year ago, Walmart posted a profit of $3.1 billion, or $1.11 a share. Adjusted per share results were for profit of $1.50 which handily beat analysts’ estimates for $1.32 per share.
Sales rose 8.7% to $152.81 billion, which beat Wall Street estimates of $147.7 billion, according to FactSet. Sales in Walmart U.S. stores open for at least a year grew 8.2% and online sales rose 16%.
CEO Doug McMillon said the company “had a good quarter with strong top-line growth globally led by Walmart and Sam’s Club U.S.” As a result, the Walmart raised its full-year outlook to reflect the third quarter performance.
The company expects 5.5% consolidated net sales growth for fiscal 2023, up from 4.5%. Excluding divestitures, growth is expected to come in at 6.5%, up from 5.5%.
U.S comparable store sales, excluding fuel is now estimated at 5.5%, compared to 3% previously estimated.
McMillon also noted the company “significantly improved” its inventory position throughout the quarter and offered an optimistic outlook for the last few months of the year as the company offers holiday deals to lure in shoppers.
Inflation, which remains elevated, is still presenting challenges for Walmart and other retailers as low-income shoppers trim spending.
However, inflation is easing. Consumer inflation reached 7.7% in October from a year earlier and 0.4% from September, the Labor Department said earlier this month. The year-over-year increase, a slowdown from 8.2% in September, was the smallest rise since January.
The Associated Press contributed this report.