Comparable store sales for Walmart U.S. increased 3.2% in the third quarter, and executives described fresh food as key to the growth.
President and CEO Doug McMillon and chief financial officer and executive vice president Brett Biggs each mentioned the category in the management summary of the quarter.
“We continue to see good traffic in our stores,” McMillon said in the summary. “We’re growing market share in key food and consumables categories, including fresh, and we had positive comps in general merchandise. Comp sales growth of 3.2 percent, along with good expense management, helped us leverage (selling, general and administrative expenses), particularly in physical stores, even as we made investments in price.
“On a two-year stack, comp sales of 6.6 percent are among the best we’ve seen in a number of years,” McMillon said.
Biggs provided some additional details.
“Comp sales growth reflects strength across most key categories and channels, with grocery continuing to perform well with a mid-single digit comp sales gain,” Biggs said in the summary. “Fresh food was particularly strong this quarter, with mid-single digit comp sales growth, as improvements in areas like bakery and meats are resonating with customers.
“We’ve focused on improving fresh presentation and product quality, and this has resulted in stronger sales and market share gains, according to Nielsen,” Biggs said. “Private brand sales continue to be strong with increased penetration versus last year.”
Walmart reported its e-commerce sales grew 41% in the third quarter, with online grocery a major contributor.
The company plans to use food as a lever to improve the company’s overall online business.
“We’re making progress on many fronts, but we need to do more and move faster, especially with our assortment including marketplace,” McMillon said in the management summary. “I continue to challenge the team to drive a deeper, more sustainable relationship with the customer, better execute the fundamentals, and improve the overall economics of the business.
“Our strength is being driven by food, which is good, but we need even more progress on Walmart.com with general merchandise,” McMillon said. “We’re mixing the business out better to achieve better margin rates, but there is more work to do. We’re committed to progress and building a larger, healthier e-commerce business. Our customers want that, our marketplace sellers want that, and so do we.”
Walmart now has more than 3,000 grocery pickup locations and more than 1,400 same-day grocery delivery locations, according to the company’s third-quarter earnings release.
“Grocery pickup and delivery, along with new offerings like Unlimited Delivery and InHome Delivery, will help us unlock advantages we have to serve customers in a way that reduces friction and enhances convenience,” McMillon said in the summary. “We need to translate this repetitive food and consumable volume into a stronger Walmart.com business that’s profitable over time, so that’s what we’re working on.”
Even as the company is placing significant emphasis on its e-commerce business, Biggs described supercenters as great assets for Walmart, and he mentioned the same new delivery programs McMillon did as examples of how the company is finding new ways to take advantage of that infrastructure.
“Each of these new offerings leverages the supercenter in ways we only imagined a few years ago,” Biggs said. “So we’re finding new ways to deliver great customer experiences across channels that will result in new opportunities to generate traffic, build loyalty and drive revenue growth. At the same time, we’re leveraging technology and automation to operate more efficiently, deliver cost savings and replace repetitive tasks.
“We’ll continue the strategy to leverage our scale, unique assets and financial strength to position the company competitively for the longer term while balancing investments and profitability in the shorter term,” Biggs said.