Wal-Mart Stores, the world’s largest retailer, on Thursday reported a quarterly upturn in comparable store sales for the first time in almost two years, but it warned of headwinds ahead of what is expected to be a highly competitive holiday season.
Wal-Mart said diluted earnings per share came to $1.15 in the third quarter, or $3.71 billion, narrowly beating the consensus of $1.12 a share among analysts surveyed by Reuters and above the $1.14 it booked in the same quarter last year.
Total revenue for the quarter grew 2.9 percent from the previous year to $119 billion for the 13-week period ending Oct. 31. In the United States, comparable sales — or sales in stores open for at least a year — rose 0.5 percent, the first uptick in seven quarters.
Greg Foran, chief executive of Wal-Mart U.S., said in a conference call with analysts that sales grew in home goods and apparel, the health and wellness category, and the smaller Neighborhood Market stores. Online shopping was another bright spot, he said.
But comparable sales were flat in its critical grocery department, as well as in its entertainment offerings, like video games. And he warned of “sales and operating cost headwinds” that he said could weigh on Wal-Mart’s bottom line.
“Overall, I would characterize the quarter’s sales performance as mixed,” Foran said. “As we enter the fourth quarter, we see both opportunities and challenges ahead of us.”
Wal-Mart is counting heavily on the upcoming holidays. Its Black Friday sales will now stretch over a five-day period, from 12:01 a.m. online on Thanksgiving and running through Dec. 1, the retail giant said this week.
Foran sounded several warnings for the year’s end, however.
“We expect this holiday season to be highly competitive,” he said.
He said that entertainment, which makes up a larger percentage of sales in the fourth quarter, was an especially challenging area, given the falling prices of games and electronics and a lack of new products.