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Walmart (WMT +4%) is heading modestly higher after reporting Q3 (Oct) results this morning. The retail giant beat on EPS and revenue. It also raised full year EPS and revenue guidance. Transaction counts and unit volumes were positive across each segment. WMT also said it continued to gain market share in the US both in grocery and general merchandise with $100K+ households accounting for 75% of that share gain. WMT was pleased with its Q3 results despite there being a US port strike, two large hurricanes, and the flooding they caused.

• Its Walmart US segment performed well with comps (exc fuel) up +5.3%, up from +4.2% in Q2 and +3.8% in Q1. We think this strong comp is a key reason why the stock is higher. WMT said sales reflect broad-based strength across merchandise categories with strong transaction counts and unit volumes. WMT also benefitted from share gains, primarily from upper-income households. Walmart Connect advertising grew 26%, although that was down a bit from 30% growth in Q2.
• WMT said it had almost no like for like inflation in the US this quarter. WMT was pleased to see general merchandise grow low single digits in the US, even as prices were deflated by over 4%. The company did say it's feeling some margin pressure from growth in GLP-1 drugs, so it was pleased to see general merchandise sales be positive across the company.
• Sam's Club US comps (excl fuel) are following a similar pattern as Walmart US comps, namely it is seeing a strong trend higher. Comps came in at a robust +7.0%, up from +5.2% in Q2 and +4.4% in Q1. Growth was led by food and health & wellness categories. Comp growth was primarily driven by transaction counts and unit volumes. It also saw share gains in grocery and general merchandise categories, including apparel and consumer electronics. E-commerce sales were up 26%.
• The company does not provide comps for its Walmart International segment, but sales grew 12.4% CC to $30.3 bln. This was notably higher than Q2's 8.3% CC growth. Growth was led by Flipkart, Walmex, and China with transaction counts and unit volumes up across markets. WMT saw growth in general merchandise and food & consumables. Also, the timing of Flipkart's The Big Billion Days event benefited growth in Q3 and will impact growth in Q4. E-commerce sales were up 43%.
• Looking ahead, WMT says it's excited for the holiday season and its stores are ready. WMT had a good back-to-school and a good Halloween. So it's going into the holiday season with momentum. General merchandise, which had been a trouble spot, has improved and that is despite some deflation in some GM categories. Inventory is in very good shape heading into the holiday quarter.

Overall, this was an impressive quarter for the retail giant. What really stood out were its increasing comp trends at both Walmart US and Sam's Club US. Q3 comps were better than Q2 which were better than Q1, so that provides some excitement heading into the Q4 holiday period. Another standout was general merchandise. A few quarters ago, many GM categories were struggling and overall results were buoyed by groceries. But now GM is coming back. And finally, a big reason WMT is gaining share is because it is attracting more higher income customers as they seek out value buys.