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Here’s What’s Driving Walmart’s Sales Growth

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Walmart surpassed sales estimate

Walmart (WMT) reported sales of $123.2 billion in fiscal 3Q18, which easily exceeded analysts’ expectation of $121 billion, rising 4.2% YoY (year-over-year). Strong sales in its US (SPY) segment, driven by stellar growth of its e-commerce business, drove the company’s top-line performance. It also witnessed improved comps (comparables) across all its business segments, and its international business returned to a growth trajectory.

In comparison, rival Target (TGT) also managed to improve its top-line performance in fiscal 3Q17, driven by increased traffic and a strong performance for its digital business. Costco (COST) continued to outperform its peers with its industry-leading sales growth. Its sales rose 15.7% in the last reported quarter, driven by higher traffic and a rise in average transaction size.

What drove Walmart’s 3Q sales?

Walmart’s fiscal 3Q18 sales rose from the company’s continued investment in price. Fresh offerings, expansion of its online grocery pickup service, and growth in private brands further supported its top-line growth rate. Store remodeling and multichannel offerings also resonated well with consumers.

Walmart’s shift of focus to its digital business, supply chain reinvention, and store remodels, away from opening new stores and Sam’s Clubs, is gaining traction and has helped the company report higher sales. That comes despite increased competition in the United States from the expansion of Aldi, Lidl, and Amazon (AMZN).

Outlook

Walmart’s top line is projected to improve in the upcoming quarters due to the company’s digital initiatives and value pricing. The addition of popular brands and the expansion of its online grocery pickup service are expected to support the company’s sales during the holiday season. For fiscal 2019, Walmart’s top line is estimated to rise 3% on a constant currency basis.

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