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Walmart Issues Better Than Expected Sales, Profit Forecasts As It Offsets Supply Chain Woes

Walmart Issues Better Than Expected Sales, Profit Forecasts As It Offsets Supply Chain Woes
Forecasting growth in demand for its products during the crucially important holiday season, its annual sales and profit forecast were raised by Walmart Inc earlier this week, even as the largest retailer of the world saw its margins for the third quarter being hit by global supply chain issues. 
Just prior to the peak shopping season, it has been very difficult for most of the major retailers including to bring various products into the United States from different parts of the world because of the disruption in the shipping industry as well as factories in supplier countries in Asia being closed down temporarily because of the resurgence of Covid-19 infections and a shortage of raw materials in the recent months.
To counter the situation, Walmart has been chartering its own vessels for movements of goods and the company said that its inventory in the United States was higher by 11.5 per cent prior to the busy festive shopping season.
"We have the people, the products, and the prices to deliver a great holiday season for our customers and members," Chief Executive Officer Doug McMillon said in a statement.
This positive forecast of the festive season from Walmart is dissimilar to what has been forecast by rival and e-commerce giant Amazon, whose fourth quarter forecast was not up to the of the market while it also issued a warning for higher expenses for the holiday period to account for an increase in demand for online shopping.
However, Walmart issued an expected same store sales in the United States for the entire year to be more than 6 per cent more compared to its prior forecast of between 5 and 6 per cent. Walmart said it expected its adjusted profit to be about $6.40 per share up from a previous range of $6.20 to $6.35.
The company also reported a 9.2 per cent rise in sales, excluding fuel, at US stores open at least a year during the third quarter, driven by a rise in demand for grocery products and with customers making more in-store purchases than during the peak of the pandemic. Analysts had estimated a gain of 7.04%, according to Refinitiv data.
At the same time however, the company reported a drop in gross profit rate of 42 basis points because of higher supply chain costs.
The company also reported a 4.3 per cent rise in the total revenue which was higher than the market was expecting and came in at $140.53 billion and on an adjusted basis it earned $1.45 per share.
The company's stock was up about 1% at $148.24 in premarket trading.

Christopher J. Mitchell

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