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Investing.com – Walmart stock (NYSE:WMT) gave up initial gains and fell 1.4% Tuesday on worries that inflation could hit its margins in the ongoing quarter.
The company’s third-quarter gross profit rate decreased 42 basis points and some analysts warned of a margin hit this season. Evercore’s Greg Melich told Reuters that supply chain issues or inflation could see Walmart down 10-30 basis points on its fourth quarter gross margin rate in the U.S.
U.S. consumer prices rose at the fastest pace in 31 years in October. According to the Labor Department, the consumer-price index rose in October by 6.2% from a year ago,
The retailer is assuming that consumers would turn to its discounted prices in the holiday season.
Walmart said U.S. inventory was up 11.5%, increasing hopes that consumers will find what they want at its stores during the holidays.
Excluding fuel, Walmart expects U.S. comparable sales to grow above 6%, compared to its previous forecast of a 5% to 6% rise.
Adjusted profit is expected to be around $6.40 per share, up from the previous $6.20-$6.35 forecast.
Third-quarter comparable sales in the U.S. climbed 9.2%. U.S. ecommerce sales grew 8%. In overseas markets, Flipkart in India and units in China and Mexico delivered strong growth in ecommerce.
“We gained market share in grocery in the U.S., and more customers and members are returning to our stores and clubs around the world,” Walmart Chief Executive Officer Doug McMillon said in the statement.
Total revenue was up 4.3%, at $141 billion. On an adjusted basis, it earned $1.45 per share, 5 cents above Wall Street expectations.
