Walmart Inc reported better-than-expected quarterly U.S. comparable sales on Thursday and raised its full year outlook as a strong economy boosted customer store visits and e-commerce purchases grew as it sold more groceries online.
The strong performance ahead of the key U.S. holiday season sent the retailer's stock up about 0.5 percent to $102 per share in pre-market trade.
"Fresh (food) continues to do very well but there is strength across the board from a category standpoint," Chief Financial Officer Brett Biggs told Reuters in an interview.
Grocery sales make up 56 percent of Walmart's revenue, and at its investor day last month Walmart's Chief Executive Doug McMillon emphasized Walmart's advantage in the food category, an area that rival Amazon.com Inc is trying to crack, particularly following its acquisition last year of organic grocer Whole Foods. McMillon said Walmart can offer fresh food within 10 miles of 90 percent of the U.S. population.
Walmart's sales at U.S. stores open at least a year rose 3.4 percent in the third quarter, excluding fuel price fluctuations, higher than analysts' estimates of a 2.87 percent increase, according to IBES data from Refinitiv.
Walmart has recorded over four straight years of U.S. growth, unmatched by any other retailer. During the second quarter it posted its highest sales growth in a decade.
E-commerce sales soared 43 percent, topping the 40-percent growth in the previous quarter. The retailer has said it is on track for e-commerce sales to rise by 40 percent this year.
"Online grocery continues to grow, our customers continue to like it," Biggs said. "On the site itself, search is better, the site is better, we are adding brands, we have added over 2,000 brands in the past few months, pricing continues to be sharp so all these things together have contributed to the performance," he said.
The retailer has also been on an acquisition spree, buying brands aimed at millennial shoppers who typically don't shop on the retailer's website. Walmart recently bought lingerie retailer Bare Necessities after purchasing plus-sized clothing startup Eloquii a week earlier.
The retailer suffered a setback in India on Tuesday when the chief executive officer of its Flipkart Group, Walmart's Indian e-commerce business, resigned following an allegation of sexual assault.
Walmart paid $16 billion for a roughly 77-percent stake in Flipkart in May, its biggest acquisition and a major move in competing against Amazon.com Inc.
Walmart's quarterly total revenue increased 2.4 percent to $126.1 billion, excluding currency changes, beating analysts' estimates of $125.56 billion.
Adjusted earnings came to $1.08 per share, beating expectations of $1.01.
Consolidated net income attributable to Walmart for the third quarter stood at $1.71 billion versus $1.75 billion a year ago.
Walmart raised its adjusted earnings outlook for fiscal year 2019 to $4.75 to $4.85 per share from $4.65 to $4.80. It also said it expects comparable sales, excluding fuel, to grow "at least" 3 percent, a change from "about" 3 percent earlier in fiscal 2019.