Walmart's online grocery business continues to drive growth in the company's e-commerce sales, according to the retailer's third quarter financial results. However, Walmart CEO Doug McMillon said the company is now working on ways to translate the strength of its food business across the broader Walmart.com.
Overall, the world's largest retailer said online sales grew at a rate of 41%, with US same-store sales climbing 3.2%. Walmart again credited the gradual rollout of its grocery delivery service for its overall gains in digital.
"We're growing market share in key food and consumables categories, including fresh, and we had positive comps in general merchandise," McMillon said. "We're making progress on many fronts, but we need to do more and move faster, especially with our assortment including marketplace."
The company noted that grocery pickup is now available in more than 3,000 locations and delivery is available over 1,400 locations. The retailer expects to offer grocery pickup at 3,100 of its stores and delivery at 1,600 of those locations by year-end. Walmart also touted the launch of its InHome Delivery service in Kansas City, Pittsburgh and Vero Beach, which drops grocery orders directly in customers' kitchens.
The challenge going forward, McMillon said, is growing general merchandise sales to the level of its food business.
"Our strength is being driven by food, which is good, but we need even more progress on Walmart.com with general merchandise," said McMillon. "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."
Nonetheless, McMillon said Walmart is "prepared for a good holiday season" and raised the company's outlook for the fiscal year.
As for the numbers, Walmart reported a net income of $3.29 billion, or $1.15 a share. Revenue came to $128 billion with non-GAAP earnings of $1.16 a share. Analysts expected revenue of $128.7 billion and earnings of $1.09 a share.
For fiscal 2020, Walmart now expects adjusted earnings per share to "increase slightly" compared with last year. Previously the retailer expected EPS to range between a slight decrease to a slight increase, up from its prior forecast calling for a low-single-digit percentage decline.
Shares of Walmart were up about 4% in early trading.