Walmart's Online Sales Growth Slows--Update
February 20 2018 - 8:13AM
Dow Jones News
By Sarah Nassauer and Austen Hufford
Walmart Inc. said Tuesday that sales rose steadily over the busy
holiday shopping period, but online sales growth slowed during the
quarter as the world's largest retailer tries to fend off
Amazon.com Inc.
The company said operational snags cut into growth at its U.S.
e-commerce business. Walmart also said it has cut overall marketing
spending at Jet, the high-profile online store it bought in
September 2016, to instead focus on acquiring new customers for its
main website. The company expects Jet to continue to target
higher-income, urban shoppers, but not grow as quickly as it did in
its early days.
In the quarter, Walmart posted a profit of $2.18 billion, or 73
cents a share, compared with a profit of $3.76 billion, or $1.22 a
share, in the same period a year before. On an adjusted basis, the
company brought in $1.33 a share, below the $1.37 expected by
analysts polled by Thomson Reuters.
Same-store sales at Walmart's U.S. locations rose 2.6%, above
the company's guidance for the quarter ended Jan. 31. In part
Walmart benefited from a strong economy that also boosted holiday
sales at other retailers, but stronger sales across a broad
category of merchandise and lower inventory also helped, the
company said. Sales in existing stores have risen for 14
consecutive quarters. Traffic rose 1.6%.
U.S. e-commerce sales grew 23% in the fourth quarter, down from
50% in the third quarter. Walmart expects U.S. e-commerce sales to
grow 40% in this fiscal year, in-line with what it previously
expected. E-commerce sales still account for a fraction of the
retailer's over half-a-trillion dollars in annual revenue.
For the current year that just started, the company expects U.S.
comparable Walmart store sales to rise 2% and net sales growth of
1.5% to 2%.
Shares fell 3.8% in premarket trading.
Last month, Walmart said it would raise starting wages for store
workers to $11 an hour, add parental-leave benefits and hand out a
one-time bonus to many hourly workers. The wage and bonus payments
would cost around $700 million up front, the company said. Analysts
estimate the additional parental-leave benefits would cost around
$100 million.
The company also said the new U.S. tax law added to earnings by
$207 million in its latest quarter, though that amount could shift
as the company completes its analysis.
Walmart has drastically shifted how it spends, moving away from
building more cavernous supercenters, instead improving existing
stores and investing in e-commerce. That shift has included store
closures, job cuts and a tighter control on everyday expenses as
Walmart invests in faster home delivery, e-commerce acquisitions
and partnerships with international online retailers. Still those
efforts continued to pressure margins, which fell as Walmart spent
to grow e-commerce sales and reduced prices in some markets.
Overall holiday sales have been strong at many traditional
retailers, as well as Amazon, pushed by rising wages and low
unemployment. Last month Target Corp, Macy's Inc. and J.C. Penney
Co. said sales grew over the holidays. Walmart said it saw solid
holiday sales.
E-commerce sales at Walmart U.S. have grown quickly since the
acquisition of Jet.com Inc. Jet founder Marc Lore took over
Walmart's e-commerce operations, quickly adding features like free
two-day shipping on more items, expanding online selection and
buying a string of smaller online retailers. Walmart also has added
hundreds of online grocery pickup locations at stores, which are
counted in the e-commerce figures. Walmart has expanded the grocery
pickup option quickly, noting it is less expensive than delivering
fresh food to homes. On Tuesday the company said it would also
expand its grocery home delivery services.
Write to Sarah Nassauer at sarah.nassauer@wsj.com and Austen
Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
February 20, 2018 07:58 ET (12:58 GMT)
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