WMT Walmart Inc

By Sarah Nassauer 

Walmart Inc.'s profit and sales rose over the winter holidays, a sign that the retail giant lured shoppers from rivals and that Americans continued to spend freely amid mixed economic signals.

In the U.S., the company's comparable sales, which exclude gas but include digital sales, rose 4.2% in the January-ended quarter, adding to a string of positive quarterly sales. Walmart got a boost from strong grocery sales, online orders, as well as holiday purchases including toys.

Walmart had expected quarterly U.S. comparable sales to rise at least 3% from a year earlier. In the latest quarter, the company got a lift from the U.S. government sending February checks to Supplemental Nutrition Assistance Program recipients in January to ensure payment amid the federal government shutdown. The company said the shift added 0.4% to its comp sales growth.

The results -- following mixed economic data and sales updates from other U.S. chains -- were mostly better than Wall Street had expected and the company reiterated its financial forecasts for fiscal 2020. Shares of Walmart gained about 5% to $104.69 in premarket trading Tuesday.

Walmart said e-commerce sales rose 43% in the latest quarter and 40% for the full fiscal year, hitting the company's expectations for a small but key part of its business. The growth has been driven by the expansion of online grocery pickup services to over 2,100 of Walmart's 4,600 U.S. stores this fiscal year. Walmart also started offering online grocery delivery in about 800 stores.

When customers buy online, then pick up in store parking lots, those sales get counted as online sales. Walmart has previously said U.S. e-commerce growth will slow to 35% this fiscal year.

"Progress on initiatives to accelerate growth, along with a favorable economic environment, helped us deliver strong comp sales and gain market share," said Walmart Chief Executive Doug McMillon in a release.

Overall, Walmart reported a quarterly profit of $3.69 billion, or $1.27 per share, compared with $2.18 billion a year earlier. Excluding a tax-related charge and other items, Walmart said it had an adjusted profit of $1.41 a share. On that basis, Wall Street was expecting earnings of $1.33 a share.

Total revenue, including the Sam's Club chain and Walmart's overseas business, was $138.8 billion, up 1.9% from a year ago. Excluding currency swings, Walmart said total revenue rose 3.1% to $140.5 billion.

While Walmart reported an increase in visits to its U.S. stores in the January-ended quarter, it posted a much higher jump in the average amount spent. At the same time, its profit margin declined, a result of a higher percentage of its sales coming from lower margin e-commerce orders, rising transportation costs and online investments.

Walmart is the first major U.S. retailer to report full fourth quarter results. In January, some chains including Target Corp. and Costco Wholesale Corp. said they had the strongest holiday sales in years, but others including Macy's Inc. and Kohl's Corp. reported sluggish growth.

Meanwhile, Amazon.com Inc. reported a record quarterly profit and said revenue rose 20% to $72.38 billion, the smallest quarterly jump since 2015.

Generally, U.S. retailers were buoyed last year by a strong U.S. economy, high employment and rising wages. However, government data released last week showed December sales at stores, restaurants and online fell a seasonally adjusted 1.2% from November, the biggest monthly drop since September 2009.

Outside the U.S., Walmart has been shifting its focus, selling its retail stores in Brazil and agreeing to merge its U.K. stores with a rival. The company also struck a deal to spend $16 billion to acquire Indian e-commerce company Flipkart, a move that it has warned will weigh on its profits. In the fourth quarter, the retailer reported strong comparable sales gains in Mexico and a decline in China.

Since Walmart agreed to buy Flipkart last year, the startup's CEO Binny Bansal has stepped down and the Indian government has changed regulations surrounding how foreign e-commerce firms are allowed to operate. Amazon warned last month those changes could hurt growth in the country.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

(END) Dow Jones Newswires

February 19, 2019 09:06 ET (14:06 GMT)

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