×

Walmart’s CEO Has a List of Reasons Why Investors Shouldn’t Worry About Its Online Sales Slowdown

Shares for Walmart are taking a beating today — down nearly 10 percent to $94.74 as of 10:45 a.m. ET — after the firm missed profit forecasts and reported a deceleration in e-commerce growth during the all-important holiday period.

After several quarters of robust online growth, the retail behemoth — which has steadily ramped up its efforts to compete with digital powerhouse Amazon — said e-commerce sales and gross merchandise volume at Walmart U.S. increased 23 percent and 24 percent respectively, a slowdown compared with previous periods when e-commerce sales grew as much as 50 percent.

Overall, the largest private employer in the U.S. — which last month promised to use new corporate tax kickbacks to up its employee minimum wage — said it’s fourth-quarter profits were $1.33 per share, 4 cents shy of analysts’ bets for adjusted earnings per diluted share of $1.37. On a reported basis, earnings per diluted share were 73 cents.

Revenues increased 4.1 percent to $136.3 billion, topping projections for revenues of $134.9 billion. Walmart U.S. comp sales increased 2.6 percent and comp traffic increased 1.6 percent.

Over the past three years — facing Amazon’s frantic rise and general brick-and-mortar pressures — Walmart had moved aggressively to up the ante on digital — snapping up Jet.com, ShoeBuy (now Shoes.com), Moosejaw, ModCloth and Bonobos in the past 18 months. In November, the company also announced a new online partnership with upscale department store Lord & Taylor.

On a call with investors today, Walmart president and CEO Doug McMillon shrugged off the e-commerce deceleration as one that was “expected” after the firm lapped its Jet.com acquisition “as well as created a healthier long-term foundation for holiday.”

“A smaller portion of the slowdown was unexpected as we experienced some operational challenges that negatively impacted growth,” he added, before recounting a list of the firm’s latest digital savvy moves that suggest the retailer continues to move in the right direction for the long term.

“This has also been a year of good progress in e-commerce,” McMillon said during today’s conference call. “We launched free two-day shipping on Walmart.com. We’re expanding our test of same-day and next-day delivery, and our Walmart.com assortment has grown to nearly 75 million SKUs. Acquisitions like Bonobos and ModCloth bring unique, private-branded products to our shopping experience. In addition, partnerships like the agreement with Lord & Taylor will help create specialty experiences that complement our own assortment with more brands customers want.”

For the full-year, Walmart total revenues advanced 3 percent to $500.3 billion. E-commerce sales and gross merchandise volume at its U.S. division increased 44 percent and 47 percent, respectively. Fiscal year reported EPS was $3.28 and $4.42 on an adjusted basis.

Looking ahead, the firm calls for comparable sales growth of 2 percent at Walmart U.S.; consolidated net sales growth of 1.5 percent to 2 percent; e-commerce sales growth of 40 percent (U.S.); and EPS of $4.75 to $5.

 

TOMS Sponsored By TOMS

Building Business to Improve Lives

TOMS discusses its approach to mental health awareness and female empowerment through impact initiatives in the footwear segment.
Learn More

Access exclusive content