Walmart profit misses, e-commerce cools
Walmart Inc reported a lower-than-expected fourth-quarter profit and wrestled with slower e-commerce sales during the busiest time of the year, signs that underscore the company's challenges in a fiercely competitive landscape.
The news, announced Tuesday, overshadowed the discounter's better-than-expected sales at its established stores and higher customer counts as online services linked to its fleet attract more shoppers.
The mixed results reflect Walmart's continued obstacles to fight online leader Amazon, even as it makes huge investments in both its digital business and stores, which are eating into profits. E-commerce sales growth in its US business slowed to 23 per cent during the fourth quarter, from 50 per cent in the third quarter.
Walmart blamed the bulk of the slowdown to the company's lapping its acquisition of online retailer Jet.com a year earlier. But it also acknowledged operational issues it had to stock more TVs, toys and electronics during the peak sales periods, a move that hurt inventory of more basic items.
Still, Walmart finished the year with more than 40 per cent growth in online sales in the United States, and it expects that online sales will be revived this year to hit that same pace.
The nation's largest private employer said last month that it would raise the starting salary for US workers to US$11 an hour, give a one-time cash bonus of up to US$1,000 to eligible employees and expand its maternity and parental leave benefits.
Since buying Jet.com for more than US$3 billion a year and a half ago, Walmart has added online services, acquired brands like Bonobos and ModCloth and vastly expanded the number of items available online. Walmart is also getting ready to launch an overhauled website with a focus on fashion and home furnishings. It has teamed up with Lord & Taylor to create dedicated space on its site.
Walmart has aggressively cut prices and plans to double the number of stores where groceries can be ordered online and picked up kerbside, to 2,000 locations this year.
The retailer also teamed up with Google to pursue technology that would allow customers to shop at home using voice commands as it tries to chip away at the dominance of Amazon's Alexa-powered Echo devices.
"We're accelerating innovation in the business to make shopping faster and easier for our customers," said Walmart CEO Doug McMillon in a prerecording. "Creativity, decisiveness and speed are priorities. We made good progress this past year to save busy families time and money and we will do more."
Walmart, based in Bentonville, Arkansas, earned US$2.17 billion, or 73 cents per share, in the three-month period ended January 31. That compares with US$3.76 billion, or US$1.22 per share, in the year-earlier period.
Excluding charges, Walmart earned US$1.33 per share. The results fell short of Wall Street expectations. Analysts surveyed by Zacks Investment Research were calling for earnings of US$1.36 per share.
The world's largest retailer posted revenue of US$136.27 billion, exceeding the average analyst estimate of US$135.04 billion.
Revenue at stores opened at least a year rose 2.6 per cent at its namesake US stores. That marked the 14th consecutive quarter of increases. Customer counts rose 1.6 per cent.
The company said the strength was "broad-based" across all merchandise categories and that holiday sales were solid.
At Walmart's Sam's Clubs, same-store sales rose 2.4 per cent in the fourth quarter. Last month, Sam's Club began closing 63 US clubs while turning a dozen of them into warehouses for digital sales, with the goal of speeding up deliveries.