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UPDATE 2-Walmart raises earnings forecast, expects strong holiday sales

Nandita Bose

(Adds CFO comments, performance details, share move, PIX available)

WASHINGTON, Nov 14 (Reuters) - Walmart Inc reported better-than-expected third quarter U.S. comparable sales on Thursday as people spent more at its stores and website and the retailer picked up market share in food and other groceries.

The world's largest retailer also raised its annual earnings outlook, sending its shares up over 3 percent in premarket trade.

Walmart has now posted a 21-quarter, or over five-year, streak of U.S. growth, unmatched by any other retail chain.

Consumer spending going in to the holiday season remains healthy, Chief Financial Officer Brett Biggs told Reuters in an interview on Thursday. Retailers earn a sizeable chunk of their annual revenue during November and December.

"The consumer remains in pretty good shape, employment situation is good, fuel prices are low wage growth is pretty good," he said.

Walmart has also managed to minimize the impact from tariffs on imports from China, imposed by President Donald Trump, Biggs said. "I think we've muted the impact (of tariffs) pretty well up to this point."

The retailer gets 56% of its revenue from food and grocery sales, which allows it to manage the pressure from tariffs better than many rivals, analysts said.

Sales at U.S. stores open at least a year rose 3.2%, excluding fuel, in the quarter ended Oct.31. Analysts estimated growth of 2.9%, according to IBES data from Refinitiv.

Adjusted earnings per share increased to $1.16 per share, beating expectations of $1.09 per share.

Online sales rose 41%, higher than the previous quarter's increase of 37 pct and greater than the company's expectation of 35%.

Operating income continued to remain under pressure and fell 5.4 percent to $4.7 billion as a result of ongoing investments in its e-commerce business.

Walmarts online expansion has come at a cost to profitability, and losses at the U.S. e-commerce business could rise to about $1.7 billion this year from $1.4 billion in 2018, according to estimates from Morgan Stanley.

Walmart forecast earnings per share, including the impact from its acquisition of Indian e-commerce retailer Flipkart, to increase "slightly" from a year ago.

Total revenue rose 2.5 percent to $128 billion.

(Reporting by Nandita Bose in Washington; Editing by Steve Orlofsky and Nick Zieminski)