Jonathan Marie fixed the sign that says there are 30 more days until Christmas at a Walmart store in Miami, Florida.
Joe Riddell / Getty Images
Retailers are betting on fears that stocks are running out and shipping delays will inspire people to go to the mall, stores and websites and hunt for gifts earlier this holiday season.
However, that wave of seasonal shoppers hasn’t made it to Walmart yet, according to Walmart CFO Brett Bigs. He told CNBC that the company did see some holiday shoppers, but not enough to drive significant demand forward in the third quarter.
Unlike two of its major competitors, Amazon and Target, Walmart did not launch holiday deals in October. Instead, Black Friday sales will spread across the month of November. Target kicked off its holiday push with its Deal Days online and in-store event October 10-12. Amazon tried to lure shoppers early by organizing a three-week beauty event that began in early October.
For Walmart, delaying holiday promotions may be strategic. Walmart garnered more business for groceries, its core business, in the third quarter. Grocery sales were up nearly 10% year over year in the three-month period, thanks in part to low-to-medium single-digit inflation. The company said food sales grew $3.6 billion in the third quarter — the strongest quarterly growth in six quarters.
“With Jim Cramer,” CEO Doug McMillon said in an interview on CNBC’s “Squawk” on the street.
Michael Baker, a retail analyst at DA Davidson, said Walmart may make up for strong grocery prices by postponing its biggest holiday promotions on TVs and more until later in the season.
“It might be part of the strategy not to get that level of promotion earlier,” he said.
Holiday sales are expected to rise 8.5% to 10.5%, with total sales between $843.4 billion and $859 billion — an all-time high, according to the National Retail Federation. The trade group said higher household incomes, higher savings ratings and pent-up demand for celebrations would support those expectations.
The pandemic has shaken the rhythm of the season. Last year, major retailers kept their doors closed on Thanksgiving Day and pushed the start of their biggest holiday sales closer to Halloween in an effort to rein in the crowds. They also promoted new ways of shopping, such as curbside pickup.
This year, some retailers continued those traditions by closing stores on Thanksgiving and early sales for another reason — to boost demand because crowded ports and a shortage of truck drivers mean less stock in some areas.
Walmart’s decision to postpone its holiday promotions until November didn’t hurt third-quarter earnings. The company exceeded analysts’ expectations and raised its forecast for the rest of the year.
Bigs said that when more holiday shoppers come to his stores and website, Walmart will be ready. Its stock is up 11.5% pre-season. On an earnings call, he said, she ordered the goods early, chartered ships dedicated to Walmart merchandise, and routed them to less crowded ports.
stay in stock
John Woerner, CEO of US Walmart, said customers will see the difference when they shop. Last year, he said, the company relied on merchandise such as snacks and drinks to fill empty shelves.
“We see customers partying,” he said on a earnings call, referring to both Halloween and Thanksgiving. “I’ve been in stores all over the country and our mix of features looks a lot better than it did a year ago. We definitely have a holiday feel.”
He said Walmart has an advantage because about two-thirds of its merchandise comes from the United States, so it can skip busy ports entirely.
Baker DA Davidson said holiday sales are still in their infancy. He said he expects big retailers like Walmart and Target to do better than other retailers because consumers will feel more confident in being able to find what they want — or at least a good alternative. Plus, he said, retailers have a large footprint of stores that allow shoppers to get their hands on that coveted item rather than waiting and wondering when a package will arrive — or if there’s something on sale.
“Customers will understand that large retailers have a better chance of getting the products they want in stock and dealing with supply chain issues,” he said. “People don’t have to be in the finance world now to understand what’s going on in the supply chain. It’s in the news every night. So people understand it. People know a lot of places are going to be depleted of stocks.”