Discount retail giant Walmart reported better-than-expected third quarter earnings Tuesday morning despite having slashed the revenue outlook for its next fiscal year just a few weeks ago.
The world's largest retailer posted Q3 net income of $3.304 billion, or $1.03 per share, down from $3.711 billion, or $1.15 per share, a year earlier. Adjusted Q3 profit came in at 99 cents per share on revenue of $117.4 billion.
Wall Street was expecting earnings of 98 cents per share on revenue of $117.82 billion.
Walmart CEO Doug McMillon outlined key focus areas where the retailer is hoping to gain momentum on prior technology investments, including its supply chain, e-commerce and mobile services.
On top of opening its fifth e-commerce fulfillment center in Atlanta earlier this year, McMillon said Walmart has made strides in improving the digital relationship the retailer has with its customers.
More specifically, McMillon credited Walmart's budding online grocery service for helping the retailer pinpoint the best customers to target on a digital front. Originally launched in September, the online grocery service is now available in 140 locations across 25 markets.
"We've seen that customers who start using online grocery spend nearly 50 percent more than similar customers who shop only in stores," McMillon said. "This is the customer we're going after - the shopper in our "sweet spot" who accesses Walmart in multiple ways."
Walmart also began using a new mobile technology that enables the retailer to figure out when a customer is coming in to pick up an online general merchandise order "before they even walk into the store," McMillon said.
During the third quarter, Walmart's global e-commerce sales and gross merchandise volume growth both came in at around 10 percent, which Greg Foran, president of Walmart U.S., said was "softer than we would like." Overall, e-commerce sales contributed approximately 15 basis points to our comp, Foran said.
In terms of investments, Walmart has been pouring money into e-ecommerce and digital initiatives with the aim of creating a mobile, social, Web and brick-and-mortar revenue cycle -- part of its bid to compete with rival Amazon. Walmart noted that it plans to funnel about $1.1 billion next year into e-commerce and digital platforms.
Looking ahead, the Bentonville, Arkansas-based company now expects earnings to decrease 6 percent to 12 percent in fiscal 2017, which ends in January of that year, whereas analysts had estimated an average gain of 4 percent.
Sales growth for the current fiscal year is expected to be relatively flat. Walmart expects full-year earnings to be $4.50 to $4.65 per share.
The report follows lackluster quarterly reports from department store chains Macy's and Nordstrom, which have roused concerns on Wall Street about consumer spending this holiday season.