What Should Walmart Shareholders Watch Before the Company Reports Q3 FY2025 Results?

TradingKey - For anyone who’s familiar with the “Bix Box” stores of the US retail scene, none comes bigger than Walmart Inc (NYSE: WMT). The giant retailer from Bentonville, Arkansas has been around since 1962 and was founded by Sam Walton.

Its enormous store footprints and ubiquitous presence in the American retail scene made it the dominant player before the age of e-commerce. Of course, with the rise of Amazon.com Inc (NASDAQ: AMZN), Walmart has had to pivot and expand its e-commerce retail offerings.

While it had trouble establishing a serious e-commerce offering in the 2010s, past five years has allowed it to refine its online presence and it is now benefitting in a big way. 

Shares of Walmart over the past five years have risen over 111% and easily outperformed the S&P 500 Index’s 89% gain over the same period. So, what should investors be watching as Walmart reports its latest Q3 FY2025 earnings (for the three months ending 30 September 2024) on Tuesday (19 November) before the market opens?

Focus on sales growth and e-commerce

In Walmart’s most recent earnings report for Q2 FY2025, the company saw its sales rise nearly 5% year-on-year to US$169.3 billion. The company also raised its full-year net sales guidance to 4.75%, up from previous guidance of 4%.

That revision, which came along with its earnings release in mid-August, saw Walmart shares pop as much as 8% immediately after given the optimism surrounding the retail giant’s outlook.

A lot of that optimism was related to comments from Walmart management that suggested that its core customer is still in robust financial health. The company also said its comparable sales, excluding fuel, rose by 4.2% year-on-year in Q2 FY2025 – outpacing analyst expectations for around 3.4% year-on-year growth in comparable sales.

Walmart US same-store sales

Sources: CNBC, company reports

For Walmart’s warehouse membership club – Sam’s Club – comparable sales growth was even better, coming in at 5.2% year-on-year for the period. Its warehouse club is also proving a hit in China, where discount-focused consumers drove comparable sales growth for Sam’s Club of 13% year-on-year.

Meanwhile, Walmart’s e-commerce business continued to show strength, with its e-commerce sales globally growing by 21% year-on-year and the US outperforming with 22% year-on-year growth.

Investors will no doubt be looking to Walmart’s comparable sales growth and e-commerce divisions to see whether that growth in Q3 FY2025 can hold up.

Groceries and third-party marketplace progress

Elsewhere, investors will be looking to see whether Walmart can continue to take share in the competitive groceries segment. Cost-conscious consumers have turned to Walmart in recent quarters and the firm has also launched its own grocery brand – Bettergoods – where most everyday items are priced under US$5.

Similar to Amazon, the company is also expanding its suite of sellers on its third-party marketplace while also benefitting from the accompanying online ad revenue that these generate. The firm’s own e-commerce subscription service, Walmart+, is proving to be a hit since launching in late 2020.

Finally, investors will want to see how the US consumer is faring and Walmart’s results typically provide a great barometer into the health of the consumer in the world’s largest economy.

Walmart has benefitted from its massive scale and pricing power, with its shares up nearly 59% so far in 2024, easily outpacing the S&P 500 Index’s gain of 23.8% over the same period.