Walmart Posts Mixed Holiday Sales -- 3rd Update
February 18 2020 - 10:50AM
Dow Jones News
By Sarah Nassauer
Walmart Inc. reported sluggish holidays sales despite continued
online gains, adding to a string of disappointments from
traditional retailers as they adjust to changing shopping
habits.
Walmart said U.S. comparable sales, those from stores and
digital channels operating for at least 12 months, increased 1.9%
in the fourth quarter, a slowdown compared with the 4.2% growth the
company reported for the same period last year.
The results showed the world's biggest retailer struggled to get
shoppers to spend in its stores during a shorter holiday selling
season as it ramped up efforts to compete with Amazon.com Inc.
Walmart's U.S. e-commerce sales rose 35% in the fourth quarter,
boosted by online grocery orders.
Executives said the holiday season started strong around
Thanksgiving but blamed soft sales of general merchandise in the
weeks before Christmas. Executives cited weak sales of toys,
videogames and apparel.
"We feel pretty good about the year even though the fourth
quarter was not our best," Chief Executive Doug McMillon said
during an investor presentation Tuesday. Store sales suffered from
a late Thanksgiving as well as some merchandising missteps, he
said.
There was a lack of demand for high-price toys, Mr. McMillon
said, and Walmart stocked too many inexpensive clothes and too much
seasonal attire. "We looked like red and green and could have been
more basic and could of had some middle price points," he said.
January and February sales overall look stronger so far, he
said.
Walmart forecast another year of strong sales growth, predicting
U.S. comparable sales will increase at least 2.5% in fiscal 2021 --
after rising 2.8% in the year just ended. It expects U.S.
e-commerce growth for the year of 30%, less than the 37% booked in
2020.
Operating income fell 12.3% for the fourth quarter, to $5.3
billion, as the company continues to invest in its online
operations. Walmart has pinched spending elsewhere, adding more
automation to stores and laying off workers at some of its
unprofitable e-commerce brands.
During the quarter Walmart continued to work to cut expenses but
the savings didn't have as much impact as expected "due to lower
sales volumes and some pressure related to associate scheduling,"
Chief Financial Officer Brett Biggs said in the release.
Overall, Walmart reported revenue rose 2% to $141.67 billion for
the three months ended Jan. 31, including gains in its
international markets and its Sam's Club warehouse chain. Net
income was $4.14 billion, up 12% from a year ago, including several
one-time tax items.
Walmart has fared better than most U.S. retailers in recent
years, as the retail giant ramps up online grocery orders and takes
market share from smaller chains like Sears that are closing
stores.
The holiday season has been a disappointment to most traditional
retailers. Target Corp. fell short of its own expectations, citing
weak sales in toys and electronics. Macy's Inc. recently said it
would close another 125 of its department stores.
Due to a late Thanksgiving, there were six fewer days in the
2019 holiday-shopping season compared with 2018, which may have
eaten into sales, said retail analysts.
Walmart shares, which are trading near all-time highs, were
little changed in early trading. The stock closed Friday at
$117.89, down slightly so far this year after rallying roughly 30%
last year.
In recent weeks retail analysts have been lowering their
expectations for Walmart's sales and profits, after publishing
largely optimistic reports last year. Although the quarterly sales
growth and profits missed earlier forecasts, the results weren't as
weak as some had feared.
For the fourth quarter, Walmart reported adjusted earnings per
share of $1.38, below the consensus estimate of $1.44. For fiscal
2021, the company predicted adjusted earnings of $5 to $5.15 a
share, a slight increase from 2020, but below Wall Street's
expectations of $5.22.
Walmart, which operates hundreds of stores in China, said it
continues to monitor the coronavirus outbreak but hasn't included
any potential financial effects in its guidance for the current
fiscal year. Apple Inc. warned Monday it would miss its March
quarter financial targets due to the outbreak.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
February 18, 2020 10:35 ET (15:35 GMT)
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