On Tuesday, Walmart Stores Inc. reported positive sales numbers for the fifth consecutive quarter amid the company's declining income due to continuing e-commerce operations investments and higher wages for its employees. The slightly stronger-than-expected quarterly earnings increased its shares more than 4 percent.
Walmart, America's largest retailer by sales, has also announced that the company is expecting the sales at stores open at least a year to grow more during the current quarter including the crucial holiday season. According to Reuters, sales at U.S. stores open at least a year have increased 1.5 percent, while customer traffic increased 1.7 percent.
Walmart attributed its strong sales to food, apparel and home goods, which are performing well on the market. Unfortunately, the company's entertainment department struggled due in part to inadequate blockbuster products on the market to drive demand.
Wal-Mart's incomes have been under pressure from costs to lift entry-level wages and to improve stores. As a matter of fact, the retailer warned a month ago that those expenditures would lead earnings to drop by as much as 12 percent next year, prompting several investors to dump the stock. Despite hitting profits, the company added that those investments are also starting to translate into better customer service and assisting to boost sales.
"We are starting to get some good momentum," Walmart's U.S. operations chief executive Greg Foran said during a call with reporters.
Aside from Walmart, the robust sales figures of Home Depot and TJX are also easing the concerns over the American consumer's health in the countdown to the Black Friday sales. In spite of the recent Paris attacks, The New York Times noted that some retailers appeared to have ditched concerns that the tragedies in France would halt consumer sentiment leading to Thanksgiving sales weekend.
Meanwhile, Walmart said the third-quarter earnings per share came to $1.03, beating a consensus estimate of 98 cents. While revenue declined 1.3 percent from the previous year, to $117 billion, as per St. Louis Post Dispatch. In addition, operating income dropped 8.8 percent, and international sales fell 11.4 percent during the quarter, which was partly affected by a strong United States dollar, eroding the dollar value of overseas earnings. E-commerce sales growth has also slackened to 10 percent.
Due to the somber moods and the nervousness after the devastating terrorist attacks in Paris, however, some analysts warned that it could affect retailers' Black Friday sales at a time the rush clinch deals was already losing its appeal. And since Black Friday had already gotten a bad reputation for security following stampedes and rowdy fights at stores in recent years, New York-based consumer consultancy Strategic Resource Group managing director Burt P. Flickinger III cautioned that any terrorism fears would add to those concerns.
While extra security measures might reassure consumers, it could also remind them of dangers that they may not have been thinking about last year. Thus, consumers would choose to spend less time shopping and schedule more time with family and friends instead.
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