Wall Street was expecting a robust performance from massive retailer Walmart (NYSE:WMT), but the company nevertheless managed to outstrip their hopes with the third-quarter 2020 earnings report it issued Tuesday morning. The discount department store and grocery chain not only beat expectations on earnings per share (EPS) and revenue, but also on growth in comparable sales, or comps, and e-commerce expansion.
According to the earnings report, Walmart's quarterly revenue jumped 5.2% year over year, reaching $134.7 billion. Earnings per share rose 15.5% over Q3 2019 to $1.34 per share. Zacks Equity Research reports these metrics represent positive surprises above analyst consensus predictions of 1.3% and 12.6%, respectively.
Comps also beat expectations, with Walmart U.S. comps rising by 6.4% and Sam's Club comps extending into double digits at 11.1% growth. Wall Street analysts anticipated 5.9% comps growth. Important drivers included food, health and wellness, and general merchandise sales.
E-commerce predictably prospered during the ongoing fallout from the coronavirus pandemic, even while COVID-19 cases fell in many areas during the warm late-summer months. The company says e-commerce showed "strong results across all channels," soaring 79% year over year and contributing 570 basis points to overall comps growth.
Walmart has been shifting strategically toward online sales while reducing sub-optimal brick-and-mortar commitments, including selling off its Japanese Seiyu supermarket stake at a $2 billion non-cash loss. At the same time, it's working to become more competitive by branching out into new markets such as pet care, insurance, and its Walmart+ subscription service.
Amazon, however, remains a powerful e-commerce competitor and dominates the third-party seller marketplace, potentially setting an eventual limit on Walmart's e-commerce gains that might be lower than some investors hope.