The news: Walmart raised its full-year outlook for the second quarter in a row, as the company’s sharp focus on value continues to win it more spending from consumers of all income levels, and its fast-growing advertising business boosts profits.

• Walmart now expects net sales growth of between 4.8% and 5.1%, up from its prior forecast for a 3.75% to 4.75% increase.
• Adjusted earnings per share (EPS) are expected to be $2.58 to $2.63, a slight upgrade from the $2.52 to $2.62 it previously projected.

Q3 performance: Walmart, like Target, noted that shoppers are being selective and deal-conscious—behavior that has characterized consumer spending this year. However, unlike Target, this trend is working firmly in Walmart’s favor. The retailer’s reputation for value and convenience is helping it capture a larger share of consumers’ budgets, particularly among higher-income households.

• US comparable sales rose 4.5% YoY, thanks to a healthy increase in both average ticket (up 2.7%) and traffic (up 1.8%)—showing clearly that shoppers are visiting more often and spending more when they do.
• Walmart continued to gain share across income groups, CFO John David Rainey told CNBC, with those gains “more pronounced in the upper-income segment.”
• The disruption to SNAP benefits during the government shutdown created a minor headwind, but this has largely subsided as payments have resumed, Rainey said.

The holiday season is off to a good start, according to executives. Shoppers are responding favorably to the retailer’s wide array of products, competitive pricing, and the convenience and speed of its fulfillment options.

Ecommerce grows: Walmart’s US ecommerce sales rose 28% YoY in Q3, the seventh-straight quarter of growth above 20%. That reflects the retailer’s work to make its online experience more enticing to shoppers and its fast-growing ad business.

• Efforts to speed up delivery have resonated. Orders using expedited delivery increased nearly 70% during the quarter.
• Faster and more convenient delivery is a major driver of sign-ups to Walmart+, which added the highest number of new members this quarter since launch, incoming CEO John Furner said during the earnings call.
• Excluding Vizio, Walmart Connect ad sales jumped 33% YoY as the number of advertisers on the platform increased, with many coming from the retailer’s third-party marketplace.

This was also the quarter Walmart announced its partnership with ChatGPT. While the retailer is not as convinced as Amazon that AI agents will take over the shopping process, it is making an effort to be present on emerging channels, including AI platforms and social commerce. The goal is to ensure Walmart can satisfy consumers’ needs regardless of how they shop.

Our take: Walmart has a clear understanding of what it must do to stay relevant in a challenging environment, and it is executing that playbook exceptionally well. That has allowed it to successfully reinvent itself as a tech-forward retailer that can compete with Amazon on multiple fronts, from delivery speed to ad dollars to attracting higher-income shoppers.