No one was expecting a fall

Walmart (WMT) shares fell sharply on Tuesday, despite a strong Q3 report and higher annual sales and profit forecasts. While investors worry about inflation and supply issues, Walmart says it is ready for the festive season, along with the words "fighting inflation is embedded in our DNA".

Walmart's (WMT) financial report for the third quarter of 2021, released on Tuesday, beat market analysts' average forecasts, but the company's share price fell.

Walmart shares fell 2.55% on Tuesday, bringing its price down 0.7% since the start of the year and 6% over the past 12 months.

Walmart's report also followed a positive October 2021 US retail sales report released on Monday. Census Bureau data showed that US retail sales (excluding cars) rose 1.7% last month compared to a month earlier after rising 0.7% in September, above analysts' forecast of 1%.

A report from Home Depot (HD), the largest chain of home improvement shops in the US, also came in better than Wall Street forecasts on Tuesday.

Walmart financial report

Walmart reported Q3 earnings per share growth of 8% (year-on-year) to $1.45, up $0.05 from analysts' estimate of $1.40. Revenue rose 4% to $140.5bn, compared with an estimate of $135.6bn.

The largest US retailer said quarterly e-commerce sales were up 8% year-on-year and 87% from two years earlier.

Walmart's grocery sales rose nearly 10% to a record volume.

Walmart's forecasts The company raised its earnings forecast to $6.40 per share for the full fiscal year 2021, up from the previous forecast of $6.20-$6.35 per share.

The US shop sales growth forecast for FY2022 was raised from 5%-6% to more than 6%.

Walmart was among major retailers including Home Depot, Target (TGT) and others that chartered their own ships to carry goods as container shortages hampered traffic at ports and elsewhere in the supply chain.

This is good news for Walmart investors ahead of the biggest holiday quarter in terms of sales.