Wal-Mart on Tuesday reported marginally better-than-expected quarterly earnings, suggesting the turnaround plan for its U.S. stores is gaining some traction.
Sales in existing U.S. stores rose 1.5% in the third quarter, the fifth straight quarter of growth after a long period of declines. The number of people shopping also increased for the fourth straight quarter, up 1.7%, though they spent slightly less per trip.
Wal-Mart’s net profit fell 11% to $3.304 billion, or $1.03 per share, but adjusted earnings of 99 cents a share beat analysts’ estimates of 98 cents per share.
“The numbers brought a dose of good news to investors after a dour profit outlook crushed the shares in October, sending them into their worst tailspin in almost three decades,” Bloomberg said.
For 2015, the company now expects profit of $4.50 to $4.65 a share, compared with a previous forecast of $4.40 to $4.70. In trading Tuesday, Wal-Mart stock was up more than 3%, at $59.82.
CEO Doug McMillon has invested in e-commerce and smaller-format stores in an effort to counter online rivals like Amazon.com. But according to Bloomberg, “Wal-Mart’s supercenters remain key to his turnaround bid, and he’s working to make them more enticing.”
“We will grow the company faster,” McMillon said on a conference call. “We will add between $45 and $60 billion in revenue to the company in the next three years. That is a lot of growth — it just happens to be on a big base.”
Last month, Wal-Mart warned that the costs of boosting entry-level wages and improving stores would lead earnings to decline by as much as 12% next year, prompting many investors to dump the stock. But it has also said those investments are starting to translate into better customer service and helping to increase sales.
“We are starting to get some good momentum,” Greg Foran, chief executive of U.S. operations, said.