Walmart Inc on Tuesday raised its annual sales and profit forecast in anticipation of a surge in demand for toys and apparel during the crucial holiday season, even as global supply chain disruptions hit its margins in the third quarter.
Shares of the world's largest retailer were up 2% in premarket trading.
Major retailers including Amazon.com have been struggling to bring products into the United States ahead of the peak shopping season due to shipping logjams, shuttered factories in parts of Asia and a scarcity of raw materials in the recent months.
Walmart, which has been chartering its own vessels to move goods, said US inventory was up 11.5% ahead of the busy festive season.
"We have the people, the products, and the prices to deliver a great holiday season for our customers and members," chief executive officer Doug McMillon said in a statement.
Holiday Season Shipments
Some analysts expect Walmart and its rivals to have enough inventory this holiday season as shipments that have been delayed for months arrive at US ports.
"All of a sudden you have three months worth of product coming in," Marshal Cohen, NPD's chief retail analyst, said.
"What could have been a shortage of product at one point could now very well turn into a surplus."
Walmart's forecast comes weeks after rival e-commerce giant Amazon reported an underwhelming fourth-quarter outlook and warned of higher costs during the holiday period.
Bentonville, Arkansas-based Walmart also said it expects full-year US same-store sales to be more than 6% higher than its prior forecast of a 5% to 6% rise. Adjusted profit is expected to be around $6.40 per share up from a previous range of $6.20 to $6.35.
In the third quarter, sales at US stores open at least a year rose 9.2%, excluding fuel, benefiting from higher grocery demand and people buying more at stores. Analysts had estimated a gain of 7.04%, according to Refinitiv data.
Market Share Gain
"We gained market share in grocery in the US, and more customers and members are returning to our stores and clubs around the world," McMillon said.
The increased foot-traffic comes at a time when inflation is at a record high, and deep discounters like Walmart are trying to draw cash-strapped Americans to stores.
However, the gross profit rate decreased 42 basis points due to higher supply chain costs.
Walmart's total revenue grew by a better-than-expected 4.3% to $140.53 billion and on an adjusted basis it earned $1.45 per share, 5 cents above Wall Street expectations.
News by Reuters, edited by ESM. For more Retail news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.
