What happened

Shares of Walmart (WMT 1.00%) rose 6.5% on Tuesday after the retail giant reported solid sales growth and announced a massive new stock-buyback program. 

So what

Walmart's revenue climbed 8.7% year over year to $152.8 billion in its fiscal 2023 third quarter ended Oct. 31. An 8.2% surge in the discount chain's U.S. comparable-store sales (excluding fuel) and a 10% increase in its Sam's Club comp sales helped to drive the gains.

Notably, Walmart's e-commerce sales grew by 16%. The company's nascent digital-advertising business is also expanding rapidly, with global ad revenue up over 30%.

During a conference call with analysts, Chief Financial Officer John Rainey said Walmart is winning new business from higher-income shoppers searching for bargains amid a challenging economic environment:

We've continued to gain grocery market share from households across income demographics, with nearly three-quarters of the share gain coming from those exceeding $100,000 in annual income. 

Markdowns contributed to an 89 basis-point decline (one basis point is equal to 0.01%) in Walmart's gross margin. But the retailer made progress toward ridding its stores of excess merchandise.

"We significantly improved our inventory position in Q3, and we'll continue to make progress as we end the year," CEO Doug McMillon said. 

All told, Walmart's adjusted operating income grew by 3.9% to $6 billion. And its adjusted earnings per share increased by 3.4% to $1.50.

Now what

These strong results prompted Walmart to lift its full-year revenue forecast. Management now sees net sales growing by 5.5%, up from a prior projection of 4.5% growth.  

Additionally, the company's board of directors approved a whopping $20 billion share-repurchase plan.

"We're committed to continuing to provide strong cash returns to shareholders while still appropriately investing in our business for the long-term," Rainey said.