Dive Brief:
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Wal-Mart Stores Inc. recovered some of the ground it lost recently, reporting Q3 earnings of $1.03 per share that beat estimates of closer to $.98 per share Tuesday morning.
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Same-store sales at its U.S. stores rose 1.5%, the fifth straight quarter of gains, and store traffic rose some 1.7%, the company said.
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While the retail giant has warned that costs associated with its plan to boost wages in the U.S. will hit the bottom line hard, the company also said that better wages and training have improved in-store customer service, which is helping sales.
Dive Insight:
At first glance, Wal-Mart appears to have given Wall Street the good retail news many are hoping for, beating expectations in Q3. But the company may be benefiting from the lower expectations that slammed its share price earlier this year.
The Q3 report bodes well for the holidays, but is no guarantee, considering that e-commerce gains—not Wal-Mart’s forte at the moment—stiff competition, and low prices aren’t going away. Perhaps that’s why even Wal-Mart president-CEO Doug McMillon, said in the company’s earnings statement Tuesday that the company has some work cut out for it.
”We are pleased with the continued sales growth in Walmart U.S. and in our international business,” McMillon said in the statement. “Strong traffic and our fifth consecutive quarter of positive comps in Walmart U.S. stores show we are taking the right steps to win with customers. Although we still have work to do, we are positioning for sustainable growth through investments in people and technology to deliver a seamless shopping experience at scale.”
Earlier this year Wal-Mart announced a turnaround plan for its U.S. stores that included raising wages to retain and attract high-quality employees, as well as a focus on its e-commerce operations. Wal-Mart U.S. CEO Greg Foran said he would prioritize customer service in stores this year, focusing on stores' cleanliness and reducing out-of-stocks.
